Lease option to buy homes

Lease to own a home - the lease option approach

Do you lease your home? Why just pay rent when your rent can work toward reducing the purchase price of your next home? With the price of real estate homes continuously on the rise, it's almost impossible to save enough money to buy a home and live the American dream. Do you know it is possible to rent housing and have a portion of your rent payments apply toward the purchase of a home? This is known as a lease with option to purchase, also commonly referred to as a "rent to own home, rent option to buy, or lease with option to buy". JSC Rent to Own Homes specializes in helping you find your next home by providing thousands of free real estate listings throughout the United States. With up to 50% (sometimes more) of your monthly rent working to reduce your purchase price, you can build equity before you even own the home!

Here's how it works:

Find a home that fits your needs and negotiate terms with the Seller or Landlord of the property. Execute a contract that is a lease with an option to buy the home at some point in the future. Work within your budget to create a lease purchase contract that works best for you. There are typically three (3) primary considerations a seller/landlord might have:

1. In order to receive a rent credit of up to 50% (or possibly more) time is of the essence. You MUST pay your rent on or BEFORE the due date of your lease (typically the 1st of the month). Any payment received after the due date will result in a 0% rent credit for that month, a late fee may apply and you will not be building any equity.
2. In addition to paying rent for your housing, you are responsible for maintenance. You are now renting to own and homeownership requires maintenance. This includes things like broken windows from stones or baseballs, clogged drains, peeling paint, broken appliances, burnt out bulbs, lawn work/snow removal, etc. If any major repairs are required to ensure habitability, the owner remains responsible.
3. You need to have Option Consideration. Option Consideration is typically 2.5% to 7% of the purchase price of the home. It is a non-refundable payment, of which 100% should be credited toward the purchase price, which binds the lease purchase contract.

Here's an example transaction:

You find a nice 3 bedroom, 1 bath single family home located in a near west suburb of Chicago in a great neighborhood with good schools and a strong community. It has been freshly painted, cleaned, and is ready to move in. The purchase price will be $215,000. Monthly rent payments will be $1,500 and you will receive a 50% rent credit ($750 per month). You need between 2.5% and 7% in up front Option Consideration. Let's say your budget allows for $6,000 for Option Consideration. This equates to approximately 2.8% ($6,000/215,000). You will also need $1,500 for the first months rent for a total initial payment of $7,500.

Please note: Option consideration is not a security deposit. It is a non refundable payment toward the purchase price and is 100% credited toward reducing the price of the home.

Now suppose you paid all your monthly rent payments on or before the due date and you choose to buy the rent to own home at the end of the 12 month lease purchase contract. You will have $15,000 in equity before you even own the home! Here's the math:

You started with $6,000 and by paying your rent on time, your equity position grew 150% (another $9,000) for a total of $15,000 with 12 months. Not a bad deal! Many people find it nearly impossible to save $9,000 in a year with all the costs of living constantly on the rise.

What's the catch?
Now you may be thinking, "OK, what's the catch? This sounds too good to be true."

Answer, there is no catch. In a buyer's market, many sellers will provide value to families looking to take pride in home ownership, building community, and living the American dream in exchange for a fair selling price in the future.

But you still may be asking yourself, "If you find a nice home in a great neighborhood, why would someone give me a rent credit of 50% when you could get all the rent from someone and keep the house yourself?"

Answer, there are several reasons.

First, many sellers find it difficult to get a fair price in today's environment. A rent to own transaction will provide the seller with time, and giving back rent credit helps a family to buy a home more quickly than they could trying to save 10% or 20% to put down on a new home purchase. This gives them a head start toward building equity.

Second, when one sells a home through a realty service, a commission of 5-7% is typically paid. In the example above, this can cost more than the rent credit. Since we are not dealing with any realtors in this transaction, there is no commission and we can afford to pass along the credit to you, the Tenant Buyer.

Third, when the Tenant becomes the Tenant Buyer (via rent to own), there is an immediate sense of pride in ownership. Tenant Buyers add value to the community. They take care of their future property, make improvements, and feel good knowing their rent money is working for them (reducing the purchase price) rather than just making their Landlord rich.

Rent housing or lease with an option to buy your home? The choice is yours.

There are also advantages for the Seller or Landlord. To find out about these advantages, please visit our Seller/Landlord section.

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