Oct 30 2007
“Buy, Rent or lease option?” Part 4: Lease Option
This is something that was given to us by the OAPERI, located in Bend, Oregon. We have found it very informative, and so therefore are putting up the info here as part of a series (”Buy, Rent or lease option?”).
LEASE OPTION
The third way you can control property is through a hybrid alternative. In a Lease Option (also called Rent-to-Own and Lease Purchase) you can control the property for a specified period of time and perhaps even enjoy appreciation without be obligated to actually purchase the home.
In a lease option you make a down payment in the form of “option consideration” which is non refundable.
Many times the seller will deduct an agreed upon amount per month from your purchase price. This means that you have built in “equity” of sorts. You don’t actually have equity, but if you close the purchase you have money built in to help with your down payment and closing costs. I sometimes refer to this as a “forced savings program” because it forces the buyer/tenant to set aside money in the event he chooses to complete the purchase of his home.
All three options, buying, renting and lease option have their advantages and disadvantages. Be sure to consult with your attorney and/or tax advisor to help determine which is best for you. When you are making a decision about a new home, it is wise to consider the good and bad of either choice.
Ultimately, you have to decide if the benefits of your decision of home buying versus renting or lease option outweigh the associated costs and benefits.
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- Homes for sale in Central Oregon
- Bend, Oregon (homes, events, community)
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