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Lease Purchase Options (aka Rent-to-Own) – What is it?

I am currently selling one of our properties in Montgomery County, PA using this method, so I figure I’d talk about it since many people have questions regarding Rent-to-Own.

What is Rent to Own?

A Rent-to-Own is a basic lease agreement used with an Option to Purchase contract.  A Tenant/Buyer leases the property from the Seller/Landlord for a certain amount of time at a certain price with monthly lease payments.  On or before the end of the lease, the Tenant/Buyer has the option to buy the property at that certain price (usually agreed upon prior to the start of the lease).  The Tenant/Buyer typically gives the Seller/Landlord money upfront which is usually non-refundable (called option consideration) for the right (but not the obligation) to purchase the property and to take it off the market. 

The upfront money incentive is necessary to protect the seller/landlord. Remember their intent is to SELL the property not to rent it.  The owner gives the tenant/buyer an opportunity to fix their credit, save up more money for a down payment, or work on their eligibility to procure a loan during the months they are renting. The reward for the renter is the reimbursement they get at the end of the rental period.

Today we are seeing owners extending their Rent-to-Own options from the typical 1 year lease to 3 years as they patiently wait for the mortgage industry and the consumer to get on the same page.

There are a lot of little subtle things that go into the paperwork when you Rent-to-Own or offer your house as a Rent-to-Own, which is why we suggest using a Rent-to-Own Professional or knowledgeable Real Estate Attorney/Title Company who has successfully completed a few.

Rent-to-Own are best for serious buyers who know that they want to purchase a home but need time to get their finances together.  I believe that Rent-to-Own options are a generous and very real alternative to simply renting a home or having a home sit on the market forever.

If interested in knowing more, contact CMT Real Estate.  Also, if interested in buying or selling or utilizing lease purchase in the Philadelphia area, contact us at 1-877-SOLD-215.

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January 22, 2010 - Posted by | Uncategorized | , ,

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