In 1985, Joni and her husband Bill had something in common with most young Baby Boomers. They thought corporate America would take care of them.

That’s why, even though they were able to sell their house using a creative lease option technique, they didn’t make the mental leap necessary to see it as a way to secure their financial future. At the time, they really didn’t believe their financial future needed securing.

Joni tells the story. “Bill was young and vulnerable. He bought (his house) for way more than it was worth, and we could not sell it in the traditional way.”

Because the couple owed more than the house was worth, when the time came to move they needed a little help. Thankfully, the Realtor they were working with at the time had a suggestion.

“You know what?” their Realtor said. “Sell your house using the rent-to-own technique. That's probably the best way.”

Joni goes on, “He explained how that process worked, and we looked at each other and said, ‘Well, why not? Let's do that.’”

The Realtor told the young couple how they could rent or lease their home with a 12 month purchase option to a “tenant/buyer”. They would collect a small non-refundable deposit, known as an “option fee” from their tenant/buyer, who would then move in and make the payments. At the end of the year, the tenant/buyer would ideally qualify for financing, and buy the home.

“It took us a couple of tries,” Joni states, “but it worked exactly like he said it would.”

Not Exactly

How the Realtor “said” it would work, and how it actually wound up happening weren’t exactly the same. Twelve months went by, and their first prospect wasn’t able to exercise their option.

The couple wound up re-leasing the home to three different tenant/buyers.

But, as Joni says, “The third time was the charm- it was the third buyer who ended up actually buying the house, and that (the lease-option technique) worked really, really well for us.”

So… did the couple immediately see the potential for creative real estate techniques as an investment vehicle?