Lease Options have become even more relevant and attractive than ever before. This is because they offer a way for investors and renters to navigate the uncertainties of the real estate market and find mutually beneficial solutions. To read more about how Lease Options benefit Investors and Renters, go to my previous blog: The Rise of Lease Options: A Win-Win Solution for Investors and Renters
Thoroughly screening potential Tenant-Buyers is crucial in Lease Option deals as it helps minimize risks and ensures a mutually beneficial agreement.
By asking just a few questions, you can make more informed decisions and select Tenant-Buyers who are more likely to fulfill their obligations and maintain the property in good condition. This screening process increases the chances of a successful and profitable lease option deal for both parties involved. Get my full Script to Qualify Buyers in my course here!
You are asking these questions to find out more about them. Example are they renting now or do they live with mom and dad? You are also qualifying that they are calling on your lease option property vs a Section 8 rental.
Getting the Tenant-Buyers’ Financial Picture:
The best way to screen a potential Tenant-Buyer is over the phone or in person. A simple conversation can give you all the information needed to see whether or not it is a win-win situation.
The first question to ask is “What price range would you like to keep your rent in?”
Their answer will give you their budget for rent as well as their monthly income. For example, if they reply “$1,800” then the income needed would be $5,400-$7,200/month (based on the standard requirement of 3-4 times the rent). You can confirm this before moving forward.
Next, you will want to ask what their budget is for what they can put down (this is really the Option Fee however they won’t know that terminology). To find out what they can put down, I just ask the question. How much are you working with to put down on a home? (notice I did not call it a down payment). Once you have their financial picture, you will need to find out their timeline and what they are looking for. (Read my last blog to read about another option – Getting Properties with “Subject-To” Financing)
Does the Financial Picture Fit?
You will now have to see if the financial picture fits what they are looking for. You can do this by asking them:
“What area have you been looking in?”
“What specifics are you looking for in a home? Bedrooms? Garage?”
“What is your goal date to move-in?”
These few questions will immediately let you know whether or not they will qualify for what they are looking for. If they do not qualify, don’t delete their contact information! Instead, let them know what would be needed and set a date together to follow up.
Now if they do qualify, let’s talk about the importance of thorough screening. You want to make sure that your Tenant-Buyers are financially capable of fulfilling the lease option agreement. Consider evaluating potential Tenant-Buyers based on criteria such as income stability, credit history, and references. This will help you determine their suitability and minimize any risks.
Assessing Tenant-Buyers’ rental history and references
Verifying Tenant-Buyers’ employment and income
Conducting background and credit checks
Setting clear criteria and standards for Tenant-Buyers
In conclusion, screening and qualifying tenant-buyers for Lease Option deals is essential for ensuring a successful partnership. By asking a few key questions and obtaining their financial picture, you can determine if they are a good fit for the agreement. By setting clear criteria and standards for Tenant-Buyers, you can increase the chances of a profitable and mutually beneficial lease option deal.
Read about finding Tenant-Buyers on my previous blog, here: Marketing Lease Options to Tenant-Buyers
As always, I’d love to connect with you and hear about your journey to financial freedom. Connect with me here: WendyPatton.com/Connect
To Your Success,