Lease to Own
For many Sellers, Buyers and Renters a "Lease-to-Own" program can be a wonderful solution to selling. Consider the following benefits:
SELLER'S BENEFITS
- Opens up your property to a greater number of potential buyers
- Increases your ability to sell in a slow market
- Gives you a higher quality tenant
- Offsets your monthly carry costs
- Eases cash flow
- Enjoy the tax benefits of a Landlord
RENTER'S BENEFITS
- Easy entry into home ownership
- Lock in at today's price
- Minimum up front cost
- A portion of rent can be applied toward purchase
- Equity build up
- Ability to walk at end of lease
- Allows time to build credit and employment time
- Allows time to see if you really like living there
- Enjoy a higher quality place to live
When all of these benefits are taken into consideration you can see why this can be a great path for many people.
HOW DOES "LEASE TO OWN" WORK?
It's fairly simple. The parties enter into a regular lease but attached to the lease is a short purchase agreement briefly outlining the Purchase and Sale Terms.
Case Study:
Owen and Olga own a condo and have been offered a new job out of town. Linda and Lester agree to lease Owen and Olga's place. The lease is for 2 years at a monthly rent of $2,500. There is an option to buy the condo for $300,000 at the end of the 2 year period. The parties agreed that half of the rent ($30,000) will be applied toward the purchase price should Linda and Lester exercise their right to buy.
Owen and Olga now have peace of mind knowing their condo is not sitting vacant, but is in the hands of tenants who care. Linda and Lester always know that someday this home will be theirs.
During this time Linda and Lester have been on their jobs while diligently living in the home. This looks very good on their credit scores when they decide to exercise their option. They now have $30,000 or 10% to apply toward the purchase and have established tenancy in the home. The lender loves Linda and Lester because of this. Linda and Lester get their financing, the lawyers agree on a contract and have a smooth closing. After that... They all live happily ever after.
