Lease purchase or lease option?

These are great options for sellers when interest rates are high or when the home is free and clear (paid off). Lots of homes in Doral are owned free and clear.

For buyers, it’s a great option if you’re short on cash. Seller financing is in order with a balloon payment due 10-15 years. (Everything is completely negotiable).Picture1

And it’s a great opportunity if a house needs repairs and buyer is short on cash, but with home improvement skills. In this case a buyer can offer a low down payment, with seller financing-regular purchase or lease option or purchase.

Lease option: A lease with an option to buy

Lease purchase: An actual purchase but with a delayed closing.

Before talking about credits to the buyer (what amount of monthly rent is to be applied towards a down payment for purchase), find out if the prospective tenant can arrange financing or are you willing to carry back seller financing.

Best bet is to prequalify with a lender. A lender can let you know what the buyer can afford and how much cash it will take to cover the down payment and closing costs.

Once you find out the following:

  1. Buyer has in cash
  2. How much will the buyer need to close.
  3. Lease option or lease purchase (Decide which one)

You can then determine how much you’re willing to credit the tenant/buyer monthly.


$100 a month for the balance of the lease, with a closing to occur the month the lease expires. The money should be deposited with a third-party escrow holder (bank, title company, or attorney.) The escrow holder can be used to monitor the terms and conditions you set. It goes without saying, if you’re hiring an attorney or realtor, hire one with experience in these types of transaction. Not all attorneys are real estate attorneys and not all realtors know about lease to purchase or options.

There are many scenarios that can be exercised with these types of transaction. Seek professional assistance.

Know matter how the credit is handled, make sure you have a written purchase agreement highlighting the specific terms. Remedy for default should be very clear.

** The tenant(s) should not record their option. The reason is, if the tenant(s) do not exercise their option to buy, the recorded option is a cloud on the title.

teamDoral is a RE/MAX Premier Associates Group. Richard Recuset is a Realtor®, team leader,  Short Sale Agent, Listing Marketing Specialist,Certified Distressed Property Expert (CDPE), and Accredited Commercial Professional (ACP), serving the City of Doral, Fl and surrounding areas.

When you hire team DORAL for your real estate needs, you not only have highly qualified professionals on your side, but also access to information, markets, technology and a team of experts from around the world.
You tap into a global network with vast experience in residential and commercial real estate. That network comprises thousands of dedicated individuals, all with just one thing in mind: producing the best possible results for our clients.

*Nothing in this article is intended to solicit listings currently under contract with another broker.  This article offers no legal or tax advice and is for information purposes only.


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