Apartment and other residential renters may be presented with an option to buy the property when their lease ends or even during the contract's term period. This arrangement is known as a lease option. In many cases, the renter agrees to the purchase and the owner agrees to not sell the property to anyone else. The commercial real estate transaction can be an effective financial tool for investors. 

3 Ways Lease Options Can Be Used by Investors

1. Lessee Arrangement

With the investor serving as the lessee, there is the opportunity to enter into a lease option for lower rent and a longer term. After the deal is finalized with the property owner, the investor can sublet the space to tenants and charge a higher rent amount. 

Through this type of commercial real estate transaction, there is also the option of putting the property up for sale at a future date. Investors will typically take on the responsibility of being a landlord, which includes maintaining the property, scheduling pest control services, repairs, and other tasks associated with serving tenants.

2. Lessor Option

Many real estate investors choose this route, which essentially makes them the property owner. The way the lease option works is the investor seeks out a tenant who is interested in buying the property. The agreement allows the tenant to make the purchase by a designated date for a certain price and if the terms are amenable, the deal is finalized. 

Ideally, an investor would prefer one individual be the sole owner to minimize transaction hassles and price haggling. However, multiple tenants can provide an opportunity for them to adjust the price so that it matches the property's current value. As a result, the lessor may have additional ways to monetize to their benefit. 

3. Sandwich Method

This commercial real estate transaction involves two side-by-side agreements between the lessee and the tenant-buyer. The investor or lessee locates a property that provides a lease option from the current owner. Once that part is completed, the investor seeks out a tenant-buyer who wants a lessee arrangement, which is mentioned above. 

The contract is essentially a "sandwich," which are lease options on both the front and back end of the transaction. They are considered the "bread," with the investor being the "peanut butter and jelly" securing the arrangement in the middle. The investor collects rent and additional cash flow from all parties involved.

When it comes to arranging financially beneficial lease options, Innovative Closing Options in Winston-Salem, NC, specializes in the commercial real estate transaction. Serving the Piedmont region for more than 15 years, the licensed firm will walk investors through the entire process and provide timely updates along the way. You can also count on the team of experienced and knowledgeable team to do the legwork for locating interested lessors and tenant-buyers. To learn more about lease options, call (336) 793-1953 to schedule a consultation. Visit their website for the company's complete lineup of services.