Why Lease Options Rule!!

Lease options, or the concept of rent to own, simply refers to a rental agreement with an option to purchase at a future date.  With bank financing tight, not all potential homeowners can secure a loan and fulfill their dream of owning a home.  Many people absolutely love lease options as it is a perfect solution.  Here are just some of the benefits to sellers and investors.

1. Higher sales price – Buyers who cannot qualify for loans like FHA loans do not have as many options.  Thus they have less leverage and are willing to pay a higher price for a home.
2. Higher then market rents – On top of market rents, there is also a non-refundable monthly option price.  If the purchase contract is executed this amount goes towards the purchase price; if not executed, the seller keeps this amount.
3. Down Payment – You also get a down payment that is non-refundable if the buyer doesn’t execute the purchase contract.  If the buyer does execute the purchase contract the amount goes towards the purchase.
4. No agent commissions – You do not have to pay agent commissions which are usually 6% of your sales price.
5. No vacancy issues – Lease option buyers are motivated to stay as they will lose their down payment and monthly option money if they move.  Therefore they almost always stay.
6. No maintenance responsibility – Sellers make the tenant responsible for maintenance since they will be purchasing and owning the home.
7. Creative strategies – Lease option service, sandwich lease option, lease option assignment and even lease option a property then rehab and flip are all creative strategies to profit from lease options.  You can even earn referral fees for credit repair, agents, lenders, etc.

If you are still looking to focus on a strategy, learn about lease options.  They are win-win for all involved and have tremendous advantages for investors.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.