 What is a Rent To Own and/or a Lease Option? Rent To Own is also known as a "Lease Option" or "Lease with Purchase Option". The latter terms are probably more descriptive of what an actual Rent To Own home is. A home that is available for purchase on a Rent to Own generally refers to a situation in which the tenant/buyer leases the home for a specified period ("option period") and have the exclusive option to purchase the home anytime during that option period, which is typically 12 to 24 months. But during these difficult times, the option period can be as long as 48 months in order for a tenant/buyer to have adequate time to save for the down payment and clean his/her credit before they can qualify for a loan to purchase the house. There's a lot of confusion and myths of how a Rent To Own/Lease Option works but it's one of our favorite strategies in order to attract quality tenant/buyers that want to be future homeowners (and not just a typical tenant). It's also a great strategy to maximize our Cash Flow so we've dedicated a whole Section on this Blog that explains in detail how a Rent To Own/Lease Option works. What the advantages/disadvantages are for a prospective Tenant/Buyer (Optionee) and also the Seller/Investor (Optionor). IF you are planning/hoping to be a long term Landlord/Investor that can: 1. Attract serious, long-term Tenant/Buyers who will look after the property as if it's their own. 2. Maximize your cash flow as much as 3 Times the typical Landlord Rental. 3. Minimize tenant headaches by Minimizing property management. 4. Create a huge "built-in" equity in your portfolio. 5. Own a portfolio of quality homes and NOT junkers but still have the CASH FLOW. You MUST know and utilize the power of Rent To Own (But in a fair and equitable manner). But like anything else, many landlords have manipulated this tool to create Lease Option/Rent To Own Contracts that are one sided and unfair. The most common way is to mark up the future option price ridiculously high so they can collect the Option Fee knowing that the market will NOT likely reach that level during the short option period. To those Landlords, I say: "SHAME ON YOU!!!" UNTIL NEXT TIME... |
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Lease Option
