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 into the lease?
Well, I can give you my non-scientific assumptions about this - one is people generally are not good or disciplined with money. If they have a large sum of money in their possession and they want to buy a house and simply cannot get qualified for a mortgage they dont think they would be able to keep the money in their possession and not spend it on some do-da.
Second, it gives a sense of ownership and a stake in the property for the person paying the option fee. Even though it is non-refundable to you and me but nobody goes into an option thinking that they would not convert the lease into the option to buy.
It is only becuase of something personal happening in their lives at the time of conversion that they might decide to walk away. Dissolution of a relationship, too much debt via credit cards, loss of one family member's job could be reasons or it may something less dramatic as they dont like the house anymore.
But lage option payments get paid all the time - all you have to do is to know how to ask! And I would not worry about the whole notion of what they are going to do after 12-14 months. Frankly speaking, who cares, if you play your cards right and structure the lease option the right way - it is a win-win situation in any situation.
Last year I collected a $10,000 non-refundable option fee. And that was just ONE deal! With a $400 / month positive cash flow every month.
Now that is the system to understand and apply and not the worries about why would anybody want to pay a non-refundable option fee.
