Lease-purchase contract or sell outright. Can you guys help me understand if my assumptions are correct. This is what I am going to propose to my tenants.
Ok, I am fairly new to commercial real estate.
 In own the property and lease half the building to a tenant and I occupy the other half.  They want the whole build and are willing to do a lease-purchase.  Please correct me if I am wrong:

I am going to offer the property at the high end of the current market rate.

Set the interest rate at 6%.  Payment will be applied as principle and interest to the asking price.

5% down

They have to lease for at least 10 years before they can refinance (payoff remaining principal.)

If they lease for the full 20 year they can exercise their option for a .01.

They pay taxes and all expenses.

I will carry the insurance.

Does this sound like a lease purchase agreement or is it handled differently?

Thanks
[{"id": "iif19xw", "text": "A lease-purchase is usually a lease (one agreement) and an option to purchase (a separate agreement).\n\nIt sounds like you want a 10 year lease at the set rate, with an option to renew for another 10 years (20 year total).\n\n5% down - nonrefundable fee for the option to purchase.  \nOption period for purchase starts in 10 years and expires in 20 years.  \nOption price is calculated based on 20 year amortization.\n\nIf they decide to leave after ten years, then you still own the property and you get to keep the 5% down that they paid.\n\nThey could choose to extend the lease for another 10 years and still choose not to purchase the property. If they don't choose to purchase it at the end of 20 years, you get to keep the property. I think most likely they would choose to exercise it though, given the declining option price.\n\nIn theory, they might choose not to extend the lease but still exercise the option to purchase. Consult an attorney to avoid that scenario :)\n\nDoes that sound about right? Taxes, CAM, insurance should be covered in the lease I think.", "replies": [], "depth": 1}, {"id": "iigod5g", "text": "Are you intending to continue to occupy the other half of the building?", "replies": [{"id": "iihrmc5", "text": "No", "replies": [], "depth": 2}], "depth": 1}]