Navigating the real estate market with unconventional income? You’re not alone. Many entrepreneurs like you find it challenging to meet the traditional criteria for mortgages. As a savvy businessperson, you’re likely drawn to creative financial techniques, like buying on owner finance. However, today we’re focusing on a particularly beneficial strategy—Lease Option agreements. I dig a little deeper with buying on owner finance in another blog post, so be sure to stay tuned and subscribe.
What Exactly is a Lease Option Agreement?
A Lease Option is an ingenious agreement that allows you to lease a home with the exclusive option to purchase it later. It’s a two-tiered understanding between you and the homeowner, generally consisting of:
- An upfront payment, often referred to as an “option fee.”
- Monthly rental payments.
- A predetermined purchase price for the home, to be exercised within a specific timeframe.
An In-depth Look at Lease Option Terms
Let’s say you’ve fallen head-over-heels for a residence that screams “forever home.” After constructive talks, you and the homeowner agree on:
- An upfront $7,500 – $10,000 option fee
- Monthly rents of $1,800
- A locked-in opportunity to buy the residence for $200,000 within 24 months
As the clock ticks closer to the 24-month mark, a burning question emerges: Are you obligated to buy?
The Freedom of Choice: No Obligation, Only Options
Reaching the end of your 24-month term doesn’t mean you’re handcuffed to a purchase. If you’re not ready or willing, simply connect with the homeowner. Extensions are usually granted to well-behaved tenants who show an earnest desire to buy at a later date.
Opting Out: It’s Okay to Walk Away
Suppose the time is up, and for whatever reason, you’re not purchasing. Relax. You can proceed to your next venture without penalties or hard feelings. Remember, you were in a lease agreement with an option to buy—the latter being just that, an option.
The Agreement’s Dual Nature: Lease and Purchase Option
Herein lies the beauty of this approach—it’s not just a lease contract, but also an exclusive privilege. These two aspects work in tandem:
- The Lease Contract: This initial part of the agreement ensures you pay a monthly sum to live in the house for an agreed-upon term.
- The Purchase Option: This separate yet related clause gives you the exclusive right to buy the home at a specific price within a designated period.
Why Entrepreneurs Thrive with Lease Options
Entrepreneurs appreciate freedom and flexibility, and that’s precisely what lease option agreements offer. Whether you’re building your business or waiting for the optimal financial moment, this real estate strategy allows you to live in your dream home today while keeping your future options wide open.
That about does it for this article 🙂
If You’re Looking for Miami Rent To Own Houses…
… check out our Miami rent to own house program on this website and see our available rent to own / lease option homes by clicking the link below.