Rentals and Property Management - Tacoma, Puyallup, Pierce County, Washington

Welcome to our Guide to Lease Option or Rent to Own homes: For the purpose of this article, Rent or Lease means the same thing. Tenants may now Rent to own a home with Option to Buy on certain specific homes where the owners have agreed to work with a tenant.

This should be a "win-win" program for all involved, including me the Broker. The owner will normally pay all commissions and real estate fees. I will track the deal for as long as it takes during the rental/lease period, which can be from 1 to 5 years. I will also help the tenant to find financing if possible. Tenants will benefit by owning a home they love.

Renting to own a home is a flexible approach to becoming a homeowner when a traditional home purchase may not be feasible for the person who wishes to own. A Rent-to-own arrangement can be a solution to typical obstacles in home buying. Even if a person is currently unable to purchase a home, or if they are still a year or two away from buying a home, Rent-To-Own programs can offer the opportunity for owners to lease their home now with a serious tenant who will most likely take better care of their home and end in buying it. For tenants this option allows them to be "vested" in their home and possibly build equity which is applied toward a purchase in the future. Typically a tenant/buyer may have 2 to 3 years to complete the purchase, albeit there are certain restrictions in all such option contracts. It is my job to make sure that a Rent To Own option contract is fair to all parties involved and is accomplished by mutual agreement of course. More details, notices and disclaimer below.

Step by Step info guide - Rent to Own & Lease Option Homes!
Copied from: http://www.wikihow.com/Buy-a-House-Using-a-Lease-Option

Determine if a Rent to Own option is a good option for you. Lease/Rent To Own options can be useful home-buying tools, but they're not for everybody. In fact, some of lease options do not end with the lessee (the renter or prospective buyer) purchasing the home, and while that's sometimes for a good reason, a tenant/buyer should ask yourself a few questions before you decide to pursue a lease option in general or before you sign one on a particular house. Be aware, there are MANY Rent to Own options that vary in detail and.... who is protected or serviced the best? When I as a Broker in Washington State write a Rent to Own Option or Addenda to a Lease, it is done in a fair manner for all involved or I will not do it. Some Rent to Own or Lease Options require money down, some do not. If there is NO money or consideration down it is not a legal Lease Option in the true sense of the term, but it can still be considered to show interest or intent on behalf of the tenant. Ask yourself;
- Can you afford the option money? The option money or option fee is required for a lease option contract to be valid. This upfront payment may be quite small (equal to one or two month's rent, for example), or it may be 3-5% of the purchase price. All of this money should go toward the purchase price or down payment on the home if you decide to buy the house at the end of the lease term, but unlike a security deposit, you don't get the option money back at the end of the lease if you can't purchase the house or decide not to.
- Do you plan to stay in the area? You should be fairly certain that you want to buy the house at the end of the term. If you don't, you lose your option money that you've paid in your monthly payments.
- Will you be able to secure financing at the end of the lease term? Most of the time, the buyer will need to find his or her own financing by applying for a loan. A lease option can help you get a more favorable loan than you otherwise would be able to, but it's no guarantee, so you'll want to be reasonably sure that you'll be able to qualify for a loan at the end of the term.
- Can you afford the monthly payments on the lease. Typically (but not always) the monthly payments on a lease will include the fair rental value plus option money that will go toward the purchase of the home. Thus, the monthly payments under a lease option will usually be more than you would pay if you were renting the same house but less than a Mortgage Payment would be. For instance, if straight rent is $1,400 a month but you are offered rent for $1,600 a month with $400 a month credited to you as "option" or "down payment" money when you buy...it will be non-refundable but if you do buy then the owner has given you 100% of the extra you paid into the deal as credit to help you with your down payment or closing costs at Escrow closing time. This can be a big help in your purchase, but if you fail to buy the home then you have lost the $200 extra you have paid in each month. So be sure what you are doing. It is recommended that all parties to such transactions have all of the documents reviewed by an Attorney, this will be at your cost. We use McFarren, Stoval & Burns Attorney at Law firm in Tacoma.
Find a house you want to buy. Keeping the above considerations in mind, look for a house that you like and that you can afford. There are some companies that specialize in lease options, and in some places government programs will buy a house for you and then offer you a lease option. More typically, however, you can just find a house for rent or for sale and see if the owner will consider a lease option.We can also do that for you with our rental properties found at www.BCIrent.com -
Negotiate the terms of the lease option. The purchase price, term of the lease (usually anywhere from 6-24 months, but can sometimes be as long as 10-years), the amount of initial option money, and the amount of the monthly payments that will go toward the purchase price will all be negotiable.
Make monthly payments. You will make monthly payments just as you would make rent payments. In many cases, however, a portion of the monthly payment will be designated as option money. This money will go toward the purchase of the home if you decide to exercise your option to buy. It may be a small percentage of the monthly payment. Our company will negotiate with the owner of the property on your behalf to also give a monthly credit equal to the extra option money that you would pay, so for example if you pay $200 a month extra then the owner would give you $400 a month in real credit if you do purchase the home. This can be a big help to buyers, but be aware that all of these funds are non-refundable. So be sure.
Making improvements on the home; it is probably in your best interest to try to take care of these things. By increasing the value of the home with improvements during the lease term, you earn equity (so-called "sweat equity") in the home because the agreed-upon purchase price stays the same. This increased equity may help you get a more favorable loan if you exercise your option to buy. In essence, by increasing the value of the home you are increasing your down payment. Just be careful to not over spend along the way, if you do not buy the home you cannot take the improvements with you when you move out.
Apply for a loan. Don't wait until the last minute to apply for a loan. You should begin your application process no less than 45 days in advance of the end of the lease, and to be safe you should probably start a full two months or more before you need to buy the house. A lease option will qualify you for a refinance loan with some lenders, and these are usually cheaper and quicker to process than new purchase mortgages, but in any case it's essential to have a mortgage ready to close on the home by the date specified in the lease option contract. Once a Rent to Own or Lease Option contract has been expired, its over. The owner can opt to not renew, so its best to keep that in mind. We can assist with recommending a lender if you like.
Close on the home. If you've lined up your financing and decided to exercise your option to buy at the end of the lease, congratulations! You are now a homeowner.

*Renter/buyer additional info - Click Here.

Donald J. Leske II / Broker & Property Manager

- Need more info, or want to make a deal? Contact me today! - Contact Form - sends me an email
Or, call me at: (253) 241-6695 7am to 4pm Mon-Friday.

Step by Step info guide - Rent to Own & Lease Option Homes! Copied from: http://www.wikihow.com/Buy-a-House-Using-a-Lease-Option

Step by Step info guide - Rent to Own & Lease Option Homes!
Copied from: http://www.wikihow.com/Buy-a-House-Using-a-Lease-Option