LEASE-TO-BUY OR LEASE-TO-OWN

Written By Jennifer Wilson

A lease option is a contract in which a landlord and tenant agree that the renter can buy the property at a specified price at the end of a specified period. The tenant will pay up-front option fee and an additional amount each month that goes toward the down payment. This is sometimes called a “rent-to-own” agreement. This option is perfect for those who need extra time to build up credit and down payment. It also allows them to test out an area or home before committing to it.

There are a few Pros and Cons that come with the ren-to-own option:

CONS

  • If the market shifts during the contract period, this could affect the home value
  • Risk of losing money if you don’t qualify for mortgage or decide not to purchase property
  • Most of the time there are two fees involved monthly, rent and an additional fee

PROS

  • Gives time to clean up credit
  • Helps save for down payment over time
  • Let’s you become familiar with property

As an owner, keep in mind if you go with this option. You give up your ability to sell the property to anyone else during the lease term. You do received a higher monthly payment usually and an upfront fee in exchange. Lease options are usually long-term contracts. If buyer decides not to purchase, you will need to go through the cycle again.

Most Lease-to-Own options benefit the buyer, however, in a slow market it could work out for the seller as well.

More Posts

CONTRACT FOR DEED

Contract for Deed refers to a real estate transaction that takes place between a buyer and seller with no lender involvement. It can also be known...

MICRO-FLIPPING

We have all heard, or most of us, as flipping real estate. I have previously discussed this in an earlier blog. But have you ever heard of...

0 Comments

Submit a Comment

Your email address will not be published. Required fields are marked *

Reset password

Enter your email address and we will send you a link to change your password.

Get started with your account

to save your favorite homes and more

Sign up with email

Get started with your account

to save your favorite homes and more

By clicking the «SIGN UP» button you agree to the Terms of Use and Privacy Policy

Join our newsletter to receive the latest news and updates from our team.

You have Successfully Subscribed!