"Rent to Own", also known as a "Lease Option"
offers multiple benefits. Basically you are
renting/leasing a property with the option to buy it in the future. The price of the property is fixed when the lease option is signed and a
deposit of some sort is usually required.
Often the monthly rent payment
will be "padded" with the excess going towards the option. Buyers like lease options because
the initial outlay of cash is minimal.
Sellers like lease options because they provide a cash flow for the mortgage
and property taxes. In addition it's more likely the renter will take good care of the
property since they intend to buy it.
Benefits for Buyers include:
A relatively small outlay of cash is required. This can sometimes be the same as a
renter's security deposit plus a month's rent.
You're given the opportunity to remain in the home if
you've sold it and arranged with the buyer for a lease option.
You, the buyer are paying rent while building credit towards a downpayment on the
property.
There is likely to be long term appreciation of the property value.
Of course there are certain risks involved. Tenants/potential buyers need to
steadily improve their credit and save towards the downpayment if they want to
exercise the option within a reasonable amount of time. They must qualify for a
mortgage when that time comes and documented income and credit scores are
critical. Visit "Credit Repair" for additional information regarding improving
damaged credit.
The flip side is that a lease option allows you the time to better your credit
rating and get back on your feet.
Please don't hesitate to speak to us about a
"Rent to Own" or "Lease Option" agreement. We can answer any questions you may
have.
