Have a Back-Up Plan
This is one of the most important I feel of the top five tips to avoid lease option problems. It links well with part one in our series of Lease Option blogs also. Some investors are so keen to get going with lease options, which isn’t always a bad thing, that they sign up property option deals without considering the ‘what ifs’. What I mean by this is what happens if the tenant you have put in the property doesn’t pay you the rent on time one month? Do you have enough cash to continue to pay the monthly option commitment until the tenant does pay?
Consider a Contingency Plan
Consider a contingency plan. Do you have a small cash reserve you have built up that can pay for your monthly commitments if the rent or your income changes? Perhaps relatives or a business partner may joint venture and offer secured funds if they are needed. As part of the process of taking a lease option, include ‘having a back-up plan’.
Thinking Point – consider putting any tenant fees you decide to charge in to a pot for times when you need some cash. You might be surprised how quickly a contingency fund builds.
What is coming up in our next blog?
Our next blog, part 3 of the top five tips to avoid lease option problems, will discuss not relying on the market when signing up a lease option deal. Remember, if you cannot wait for part 3 of my top five tips to avoid lease option problems then check out our educational products here.