Note: Michael C. The Naked Investor) asked me render a short opinion on the state of the Lease Purchase Nation so here goes.
I have been using options for 26 years as a full time investor and found it to be a wonderful niche strategy. It has given my family a wonderful and secure financial lifestyle and freedom. Like all strategies a great deal of knowledge, work and Guts Sales© and marketing is necessary. I even went to law school to learn more about this topic in terms of legality and contracts.
Options are basically negotiated contractual rights (not firm obligations like a sales agreement). They are used in all forms of business like stocks-bonds-commodities and yes real estate. They allow you to control great real estate without the usual investment-liability-tenant & terlit hassles. When an option is tied into a lease you have control and possession without ownership. I work with 4 basic entities Buyers-Sellers-Professionals and Investors. I utilize a concept that I developed called "Arbitrage Real Estate"©™. It allows me to Sublet-Sandwich-Assign (wholesale & retail) and consult. I profit upfront, monthly,create notes and continuous passive income, not to mention option consideration and assignment fees.
The IRS and several states and cities has many rulings on real estate. The one that comes to mind is the is the the interpretation between an installment sale and a lease purchase disguised. Generally any L/P less than 5 years is fine and not an evasive tactic to avoid paying taxes. ? Remember it's all about intent. Just comply with the scope and intent of a law and you should avoid legalities. Get good advise from professional investors or mentors who are accountable to you !
Use good contracts-disclose everything you intend to do in writing and problems are avoided. In 26 years of investing I can only recall one situation in which an attorney was needed and we won. Let common sense and a non advesarial attitude prevail.
Final thoughts; If you treat your Lease Purchase operation like a business and not a hobby you will find it to be the most rewarding and profitable of creative real estate strategies. You will alway comply with the law, pay your taxes and live happily ever after.
Oh, and yes get a an accountable one on one Mentor
Success in all your Endeavors
[url="http://The LeasePurchase.com"]Claude Diamond J.D.Author of Lease Purchasing for the 21st Century©The Lease Purchase Bible©[/b][/b][/url]