So you found a house you like that is offered as lease option. What exactly is a lease option? In simplest terms, it’s a way you can participate in home ownership if you’re not exactly ready to purchase a home. There are two parts to this:
An option, or purchase agreement, that allows you an extended time to purchase the house for an agreed upon price. At the same time, you’re getting a lease, so for that period of time, usually anywhere from 6 months to five years, you’re also living in that property and making monthly payments. In some ways, it’s the best of both worlds — you lock in a price and participate in home ownership — even if you’re not exactly ready to own a home.
The option fee which is the money you pay in order to have the right to purchase the property (an option agreement).The owner cannot sell the property once you’ve paid your option fee or and signed your option agreement. The option fee is not a security deposit and is non refundable so you want to make sure you will be able to complete your agreement. The option fee varies between 2 months rent and 10 percent of the total purchase price of the house and typically varies based on the condition of the house, the location of the house, the length of time of the option agreement and the corresponding rent amount. The option fee paid at beginning of agreement will be applied towards purchase as a down payment if tenant buyer chooses and is able to exercise their option to buy per their agreement.
There are potential opportunities to negotiate an option where some of the monthly lease payment is conditionally applied towards a future down payment if and when property is purchased. That is not a guaranteed term, but it can be included in the negotiations.
Overall lease options can be an excellent way to get the benefits of leasing and owning a home. However just like home ownership lease optioning a home is a significant agreement and you want to make sure to get any home you are leasing optioning checked out by a trusted professional before moving forward with an agreement.
Many Cleveland Ohio landlords do not set out to be landlords. In many cases, the property owner needs to move out of the area for work or family reasons and doesn’t have enough time to sell their house before they need to leave. In those cases, many people turn to renting to cover costs. Or depending on the market, they decide to rent until the value of the the home increases.
In these situations, there are options, and we can help with all of them. You can continue renting the property and use a property manager to handle the day-to-day for you. We can help make arrangements to sell the property. The property can be marketed for sale while also rented. That way the rent is covering costs, while the house is still on the market. Learn more reading Help! I’ve been transferred out of state but can’t sell my home.
The third option that you may not know about is a lease option. This is a combination of renting and selling. In a lease option, the renters lease the property with the intent to buy after a predetermined period of time.Many Cleveland Ohio landlords understand the risks and difficulties of the market. Regardless of whether you decide to keep the property as a rental or sell it to get out of the rental business, we understand, and we can help.
Our experienced investment property management team can relieve you of the burden of managing your rental property while saving you some serious money! Call us today at (440) 220-7300 to see how we can help you!