Lets talk about the Tenant/Buyer Feature & Benefits.
If you are in the market to buy a home, you are probably aware of the advantages home ownership provides (tax shelter, appreciation, security, etc).
The lease option/rent to own contract provides you with many features and benefits, but perhaps the most powerful one is the rate at which you accumulate equity. Compare any lender’s loans amortization schedule to that of a lease option/rent to own contract and you’ll quickly see that the lease option contract wins hands-down — every time. Moreover, the buying power of a lease option/rent to own contract can quickly and easily land you a home that you could only dream of buying the conventional way.
Features & Benefits For The Tenant/Buyer:
Faster Equity Growth
Equity may accumulate much faster than with conventional financing through a bank or lender.
Option Money Is Credited Towards Purchase
When you sign a lease option contract, you will pay the seller an option deposit. This money is your vested interest in the home and will be fully (100%) credited to you when you buy the home.
Minimum Cash Out Of Pocket
When you purchase a home the conventional way, you must pay at least 5% down plus closing costs and prepaid fees. When you buy with a lease option, you only pay first month’s rent and an option fee.
Frequently no down payment at close
Since you have given the seller an option deposit and you have been receiving monthly rent credits, there will frequently be very little or nothing left to pay for a down payment at closing.
Profits From Appreciation
Since the sales price is locked in before closing (as specified in your agreement), any increase in property value will mean that your equity (what you owe minus what it’s worth) is increasing in the home.
Possible Sale For A Profit
If you are allowed to sell (assign) your option (it will be in your agreement), you may sell it to a third party for a profit.
Increased Buying Power
When you buy a lease option home, you can put down as little as first month’s rent and an option fee. Compare that to a typical bank or lender who requires 5-30% down plus closing costs and prepaids.
Credit Problems Okay
Qualification restrictions simply do not exist. You will be approved at the sole discretion of the landlord/seller.
No Lengthy Mortgage Approvals
Your approval will be based solely at the discretion of the landlord/seller instead of a lender who can take up to a month (or longer) to render a decision.
Control Of The Home
You will be put in full legal control of the home for a specified period of time without actually having to own it.
No Taxes, Less Liability
Since you do not own the home (yet), you will not have to pay property taxes and your liability exposure will be dramatically reduced.
Quick Move In Time
You can typically take possession of the home in a week or less, instead of conventional move in times of one to three months, after your offer was accepted.
Maximum Leverage
You are spending very little money to control a potentially very expensive, and very profitable, piece of real estate.
Time
Before you actually buy the home, you will have 3-24 months (depending on your agreement) to repair your credit, find the best interest rates, investigate the home and research the neighborhood and/or schools.
Minimal Maintenance
Large maintenance problems or any maintenance problems that exceed a certain amount of money can be delegated to the landlord/seller.
Privacy
Your name will not be on title or in the public records until you excercise your option to buy.
