Sandwich Lease Option

I was told you can structure in your contract, purchase price based on fair market value on the time to purchase. Or you can create a set rice now by the FMV as of now and increase it by 2%-5% on inflations x the number of years agreed upon time to exercise on the option to buy. Hope this helps.

Thanks so much Ray. That helps alot.

I agree with Ray somewhat, but with a little twist.

First of all, base your "calculations" on the present FMV but do not price it at present FMV. Give yourself the benefit of the years of option time for the appreciation to give you more profit. Also, as you estimate and are figuring appreciation you need to do each year separately to get a more accurate (meaning a little more $ for you) number.

such as:

$100,000 FMV x .04 (4%) = $4,000 + original FMV of $100,000= $104,000 after 1st year
$104,000 x .04 =$4,160 + $104,000= $108,160 after 2nd year
$108,160 x .04 = $4,326.40 + $108,160 =$112,486.40 after 3rd yr, etc.

If you do $100,000 x .04 = $4,000 x 3 yrs = $12,000 + $100,000= $112,000 which will give you almost $500 less profit. It is not huge but as you get into bigger numbers or more years can make a big difference.

Karen

Thank you Karen. I appreciate your help. All of your posts have been so helpful and easy to understand.

Jo Ann