A Beginner's Guide To A Lease Option Agreement | FortuneBuilders
A Beginner's Guide To A Lease Option Agreement | FortuneBuilders
Abstract
What is a Lease Option? A lease option, also called a lease with the option to purchase, is a type of lease contract that lets a renter purchase their rented property either during or at the end of their lease period. How Does a Lease Option Work? In a nutshell, a lease option lets a potential property buyer flexibly rent a property from an investor/owner without having to buy it at the end of the lease period. Lease Option Requirements On their face, lease options are trade-offs for property owners or investors. Why Use a Lease Option? Naturally, lease options are excellent deals for tenants who don't mind paying a little extra rent in exchange for the option to purchase the home at the end of their lease agreement. The lease option also gives them flexibility in that they aren't forced to purchase the home at the end of the lease term - they can walk away if they find another option or life circumstances force them to reconsider. More advanced investors can potentially try a "Lease option sandwich" strategy, in which the investor acts as a lessee and finds the property where they can secure a lease option from an owner. Consider the above strategies carefully and always remember that a lease option can also be risky - if you're the lessor, you're on the hook for selling your property to your tenant if they exercise the option to buy it at the end of their lease's term! Do you want to be able to retire financially comfortable? Our new online real estate class can help you learn how to invest in rental properties that can help increase your monthly cash flow.