Flipping Properties Using the Lease Option
Typically we use lease options as an exit strategy when flipping properties. If we are not able to quickly sell a house for the price that we want, then we can always fall back on the lease option.
Maybe we have found a person that wants to own the home. Unfortunately their credit is not at the level necessary to purchase the newly renovated house flip. They may have gone through a recent bankruptcy or gone through some other sort of financial trouble.
A way that we can get this type of person into one of our homes is through the lease option. The person will place a down payment of say $10,000 or $20,000 on the home. This is what is known as their “option.” That money secures their interest in the property.
Now if they never decide to buy the house, then the down payment is mine to keep. This serves as my protection and ensures that they will take care of the house. Obviously it is very important to communicate this to the person when discussing the lease option. You always want to remain 100% transparent and make sure that they understand how the lease option deal works.