Lease Options are a creative way to buy real estate. It essentially gives the renter/buyer the option to rent a property for a set period of time usually for 2-5 years at a set price. After that time the renter; the buyer exercises the option to buy the property at the agreed price or forfeit it.
This method to buy a property is popular among people who want to buy a house but do not qualify for a conventional mortgage loan. This buyer can benefit by having a portion of the rental payment go towards a down payment.
It can be a good option for a property that wants to sell a property that needs repairs that they cannot afford to complete. A lease option can require that the renter/buyer do the repairs on the property and shift that burden away from the property owners.
How Lease Options Work
A Lease option can give both the seller and buyer more flexibility lease-purchase agreement where the buyer is required to buy the property when the lease ends. The price of the property is agreed upon upfront. For the option to purchase the renter pays an option fee usually a small percentage of the sales price.
Benefits For Homeowners
Lease options can offer increased cash flow and a larger upfront deposit because homeowners can charge an option fee and charge a slightly higher rental payment for the right to lease purchase. This can offer a good solution to sell if for some reason the house is selling on the open market if the property is in a distressed situation.
Lease options can be a great way to sell your property if you have trouble selling on the market. By lease optioning your property, you are giving the buyer the option to lease the property for a set period of time before they have to purchase it. This can be a great way to get your property sold while still making some money off of it. Here are some tips on how to sell your property with lease options:
1. Make sure that you are clear about the terms of the lease option. You will need to set a price for the property, as well as how long the lease will be. It is important to be clear about these terms so that there is no confusion later on.
2. Make sure that you get a good faith deposit from the buyer. This will help to protect you in case the buyer decides not to purchase the property.
3. Have a lawyer look over the lease option contract before you sign it. This will ensure that everything is in order and that there are no loopholes that the buyer could take advantage of.
4. Be prepared to negotiate the price of the property. The buyer may try to lowball you, so it is important to be firm on your price.
5. Be prepared to show the property to potential buyers. This is often a part of the lease option contract, so make sure that you are comfortable with letting strangers into your home.
6. Be prepared to sell the property as-is. The buyer may not be interested in making any repairs, so it is important to be aware of this ahead of time.
7. Have an exit strategy in place in case the lease option falls through. This could involve renting the property out or finding another buyer.