Coach Mitch’s Non-Option Option
You rent out a house. You pick the prospect that impresses you the most; or that frightens you the least. You hope for the best, and you mentally prepare for the worst.
Renters come in two variations: someone who looks for a place in which they can be comfortable for the duration of their stay, or someone who is wants the time to pass until they can purchase a house of their own. This second type will often seek out a house rental where they are enamored with the idea of buying your property.
Owning your own home is part of the American dream. However, there are many reasons why it is not advisable to allow your property to be legally encumbered by the restrictions that an option places on your ability to maneuver, were you to grant an option to purchase your property.
Imagine if you needed to evict the tenant for non-payment of rent. A renter optionee can claim that the option provides an inchoate ownership interest in your property and therefore they are owed a part of the increase in equity that the property enjoyed since they moved into it.
I choose to not offer an option. When a renter is seeking to eventually buy a house, I offer the prospect the ability to have a first right of refusal on my house. I charge for this privilege and I know how to justify the charge. Typically, I add $300 per month to the regular rental amount. In this manner, I have been successful in collecting many extra thousands of dollars in rent.