Continuing with my series of blogs relating to real estate tips for buyers, I would like to discuss an often overlooked approach for many first time purchasers commonly known as renting to own.
In today’s market with sellers often seeking creative ways to cover expenses stemming from vacant homes, a lease option strategy may provide the entry point for a buyer who is still accumulating a down payment, in a job transition or perhaps ironing out some credit issues. A lease option usually involves a up front amount of money set aside to act as the buyers equity at the time the home will be purchased. A portion of the monthly rent payments can be added to the option monies over time.
The scenario benefits both the buyer and seller and typically runs one to three years. The renter agrees to lease the home and deposits the up front consideration at the beginning of the lease term in a special fund created in order to grant the option. The fund is later utilized as a portion of the down payment for purchase of the home. This also provides the ability for a buyer to lock in a price for what the home will sell for at the end of the option period.
Renting to own or lease option provides a buyer the opportunity to get into a home and neighborhood that is right for them and establish themselves as a member of a given community. This can be helpful especially in situations where there are school age children involved. While the benefits to the buyer are apparent there can be a downside related to forfeiture of the option fund it the option is not exercised or cannot be extended.
Lease options tend to favor the buyer but can add complexity to the transaction requiring the advice of a seasoned real estate professional and attorney to review any contractual documentation. Many sellers are willing discuss the possibility of a lease option or may even specifically market their homes in such a manner as to attract a renter who would like to purchase the property at a later date.
Coldwell Banker Encinitas Realtor Linda Moore is constantly looking for ways to improve the experience of first time buyers of Encinitas homes and provide them with innovative ways to acquire their home. She realizes that perpetual renting is not the solution and actively engages in seeking creative approaches and strategies to help renters realize the dream of home ownership.