Need Opinions Fast
I want to get some feedback on how you guys set the future purchase price for your tenant buyers. Future appraisal minus rent credits, or todays price, plus a fixed percentage per year, or some other strategy. Thanks in advance for your input.
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The sale price should be listed in the Contract before any credits. Those are deducted later. A price should be listed. The "appraisal" idea will get you in trouble in court. In most areas, just add the current rate of appreciation for a year plus an extra 5 percent.
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If the T/B decides to sue the Optionor for any reason, this is one of the things that will be looked closely at. Many disreputable L/O investors do this to inflate the price (there are lots of shady appraisers). One example is to offer the T/B a high rental credit (of 50 percent or more) but to add it back on the sale price. An Option by its definition has several elements--one of which is a set price. Just my take on things.
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