First of all, why would anybody would want to do a lease option when they just go and get a mortgage?

Second, why would any body in their right mind would want to put up hefty non-refundable option fee on a house that they may not buy 12-14 months later?

Third, where do you find these people to fit the above two?

To me the first two are irrelevant to making money in real estate! The third ones needs to be the one that should interest anybody interested in making money in lease options.

People do lease options for a variety of reasons:

1. They may not be planning to live in the area for long. It is a possibility but not a sure thing. They might be going through a possible job transfer and may or may not live in the town.
2. The credit situation is bad. They might have gone through some recent financial disaster that they are over with – divorce, bankruptcy, job loss, death – but their credit has taken a through beating and they cannot fix it just right now. Question is why not just rent? Answer is that what if you have a big family? What if you have tons of stuff you don’t want to get rid of?
3. They are still not sure if they want to be homeowners or not. They want to test the waters and see if they like it.

The first two have nothing to do with their credit. The second one is a biggie. Take it to whatever degree of truth you may, but there are a huge number of people in our country with less than perfect credit. They are not going anywhere.

Without going on a rant, I can tell you that after having hundreds of conversations after workshops and teleseminar with regular people, it infuriates me that how good family folks have been screwed endlessly by our credit system.

Nobody taught us to manage our credit or what it would take to ruin it in school. Most of the parents don’t know anything about it so nothing gets by to the kids.

A large number of potential candidates for lease options come from category number two. People who make pretty decent amount of money but cannot get a mortgage because of their mismanagement of their credit.

Lease option is a win-win situation for them.

Next: The Lease Option Fee Paradox