Lease Option Confusion

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Hey BP community!

Wondering if someone can explain lease options to me like I'm a 3 year old. I went to a small seminar about lease options last night and still couldn't wrap my head around it.
I guess my main questions are: - Why would a seller agree to this as opposed to just selling their home for cash? - Does the seller still live in the property, while the buyer/investor pays them the rent? And, as far as having multiple lease options, it seems as if the buyer/investor would have to have a very large amount of monthly cash flow to be able to lease multiple properties each month.

Again, I could have this all backwards!

Thanks so much in advance!

[Jon Holdman]

A lease/option is one form of creative seller financing. It consists of two separate agreements between the landlord/seller and the tenant/buyer. One is the lease. This is just an ordinary lease and gives the tenant/buyer (TB) possession of the property. That is, the right to occupy it. The second is the option agreement. An option agreement gives the TB the right to buy the property from the landlord/seller (LS) before a certain date (the option period). Usually there is a specific price specified in the option (the "strike price"). Usually there is a price for the option, called option money or "down payment". Technically, its called a "premium" for the option.

The LS doesn't live in the property. The LB does, though in some cases the TB subleases the property (i.e., rents it to someone else) or re-lease/options it to someone else (sandwich lease option.)