A question I've had several times in recent months is how long should a lease option contract be set for. If you're not familiar with the term lease option you may be familiar with the term rent to buy. This is essentially when you own a property and give the right to a tenant to buy the property from you in a certain period.
The benefit here is that you may choose to have a property with a fixed rate mortgage at the end of that period you then want to sell and so you have a the tenant buy the property under contract. The only point to make is that they can withdraw from the contract but in doing so they will pay a penalty. That penalty is usually in the form of a consideration or deposit that they will have made when they first entered the contract with you.
The great benefit to a lease option or a rent to buy strategy is that the tenant is staying in the property will treate it like it's their own home and you will not need to have to pay any management fees. Also you can raise the value of the rent and in doing so you create an income for yourself.
My suggestion would be that the term over which you set the option is based on several things. One primary reason would be simply that you have a redemption penalty on your existing property and when that runs out you can choose to sell a property wihtout paying the penanly. Whatever date that is you, would write the into the contract. Other people wish to sell a property in stages for tax reasons. Another way of setting the contract period is by establishing what the needs of the tenant buyer are. Some tenant buyers may need 3 to 4 years to develop a credit history and to save the money in order to buy the property from you. Ultimately it should be set by your needs and having set the initial time period you then go find the right tenants that will fit that strategy.
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