How a Home Lease Option can Improve Your Life – The saga begins. A few years ago, a tight budget meant that putting a large down payment on a house for my family was impossible. Worse yet, each month a sizable check was given to the landlord as my partner and I said goodbye to our hard-earned money. We were making him rich and gaining little in return except for having a roof over our heads. We were determined to change from being renters to becoming homeowners. We found a rental and contacted the property owner. A realtor drew up the lease option agreement which was notarized by a local tax preparer. This was the first and biggest mistake. I cannot stress enough the importance of seeking legal representation for the contract, before anyone signs on the dotted line. It can spare you from the pain and stress of unforeseen problems.
Benefits of lease options:
Peace of mind is priceless.
Peace of mind these days does have some tangible costs. Obtaining legal advice will ensure compliance with all local, state, and federal laws. Your attorney can also assist you with negotiations, transfer ability, and other terms of the agreement. In addition, have the property inspected; pay for a title search, an appraisal, etc. (just as if you were purchasing the property without the lease). These initial costs are small in comparison with the money you will spend if you have to go to court to exercise the option.
Secure your purchase price, even if the market goes up astronomically.
Let’s face it; the housing markets in most areas at this time are not doing very well. However, the markets will eventually recover, so the odds are good that your home will retain (if not increase) in value over time. If it doesn’t and the property has devalued significantly, simply don’t exercise the option. That is one of the beauties of lease options.
Low down/no down payment.
As I mentioned above, our budget was very tight and there was little money for a down payment. We were able to negotiate terms whereby we paid an extra amount each month to the landlord. This was deposited into a holding account. The slight increase in monthly payment added up over the years of the lease option, resulting in a small but respectable down payment.
Control your financial destiny.
Lock in your monthly payment and build equity at the same time. Rents generally go up each year, but you can avoid this by locking in your monthly payment using a lease option. Once executed, the option is a binding contract and the seller cannot raise the payment for the duration of the lease. The downside for you is that if you get transferred out of the area and have to move, you are still liable for the monthly payment.
The multiple benefits of win-win negotiations.
Negotiation must result in a win-win situation. Both parties will be making concessions. The win-win for the owner is having someone living in the home. This is definitely preferable to having the house vacant. It will decrease the chance of vandalism and devaluation of the property. Having a good negotiation with the people and organization involved like relater, buyer, seller and even condo association management Naples will allow you to have a smooth process.
Your big win is avoiding the burden of home repairs while you are building equity. The owner is generally responsible for repairs to the furnace, roof, etc., until you exercise the option and close on the house.
In summary: assess your situation and potential risks, do your homework, be bold, and take a chance on a lease option. Home ownership is a beautiful thing.