Lease to buy: A win-win option for buyers and sellers
Lease to buy is an option for any potential home buyer who is struggling to get mortgages to get a loan so that they can buy their dream home. Lease to buy or rent to own is not entirely a new concept. This is a contract that allows renters to lease the property and, at the end of their lease, they have the option to buy the home.
Advantages for the buyer/tenant:
# Under this type of lease-option contract, for the period stated, you are the only one who has the option to buy the particular property.
# Typically a portion of your rent is included in the down payment while purchasing the house.
# You have a contract to buy the home when the lease is up and usually you can buy the home at any time during the contract. If you are not ready whether to buy a house now or not, lease option may be advisable for you as you can test home ownership.
# In a market like India, where home prices are appreciating constantly, you may get a good deal under the lease agreement ice which is lower than how much the price appreciates.
Advantages for the seller/landlord:
# You can avail immediate cash flow from the tenant and the opportunity to sell your property later on.
# If the tenant/buyer doesn’t buy your property, you can keep the upfront fee (option money).
# You can hope to get higher-quality tenants who will take better care of the home since they may want to buy it in the future.
# Since you own the home, you retain tax-shelter benefits while you have tenants in the home.