What to do when you’re all out of (lease) options. . .
This question came up on a recent coaching call with one of my students. So, what do you do when you’re the “man in the middle,” your tenant-buyer has chosen to walk away, and your option with the seller is about to expire? What now? The good news is, you do have choices.
Here are a few of my favorites.
Ask for an extension. Most sellers will give you an extension if you ask for one. There may even be an extension clause written into your contract. Some sellers will give you the extension at no cost while others may want an additional option fee.
Sell directly to an end buyer. Market the property and sell directly to a retail (end) buyer – not a tenant buyer. The buyer will need to bring his/her own cash or financing to the table.
Buy the property yourself. You can get a mortgage and purchase the property. You would definitely want to consider this if there was enough profit in the deal. Since you have established a payment history on the property you may find that a lender will treat the loan as a refinance rather than a purchase. Very cool!
Find a partner. Bring in a money or a credit partner. Give them a part of the equity or a fixed amount for doing the financing. A good place to find a partner is at your local REIA.
Assign the deal to another investor. If there is enough equity you can wholesale the deal to another investor for an assignment fee.
Walk away. You can always tell the seller that you just don’t want to purchase the property. Remember, the beauty of a lease option is that you have the right, not the obligation, to buy.
So, there you have it, six choices of what to do with a property when you’re at the end of your option. One of them should fit your individual situation.
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