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Does anyone know how to do a Rent with Option to buy?
Can anyone explain a Rent with Option to buy? Don't you just rent for a year and then decide if you want to buy the house? And what happens if the owner decides not to sell?
Public Comments
- I have been in property management for 10 years and have never seen a lease with purchase option work successfully. Somebody always gets screwed. Instead of giving somebody money (usually non-refundable) towards a purchase that probably will never happen, take that money and put in an interest bearing account and save it for a down payment on a home. Or use it to pay off all your debt and clean up your credit if that's your problem. Real estate agents and brokers like to do them because they can get two commissions. One for leasing the house and another for the purchase (if it ever happens). Something to keep in mind when you are thinking of doing one of these. What will the value of the house be when the lease is up? Values are going down right now. Why commit to buy now when it may be less expensive to buy the same thing later.
- it's an agreement where the tenant has the option to purchase the property within a specific time frame. ALL the terms are negotiable such as the option fee, the monthly rental rate, the purchase price, if any monies get applied towards the down payment, etc. If the seller doesn't want to sell then you need to sue for breach of contract. Regards
- We do them all the time up in rural northern NM and they are probably the most misunderstood transactions that there is and if done wrong with the paper work it's junk, so make sure that you work with someone who knows what they are doing and you'll be glad you did it. Here is how it works: There are two types of rent to own; 1.) Rent with an option to purchase and 2.) Rent with a right of first refusal 1.) Rent with an option to purchase agreement: you basically negotiate a rental agreement and a purchase agreement of the property You activate the rental agreement right away and begin to rent. The purchase agreement agreed to you do not exercise until a future date, which can be anything. There is a rental amount and an additional amount tendered every month. The additional amount goes towards the exercising of the purchase agreement in the future. If you decide not to exercise the option the additional payments will be considered rent. 2.) Rent with an option to purchase: You simply negotiate a lease with a clause inserted in the lease that stipulates your rights to match any offer on the property made to the seller in the future before the seller can sell it to someone else. There is usually only a rental payment and sometimes a one time payment for the right to purchase protection. Best of luck to you.
