1. What is a Lease Option???

FAQs

1. What is a Lease Option?

A Lease Option is a method by which you can gain "control" over property without actually having direct ownership.  It is a method often designed to help a person or family get into a home within the near future.  It also allows for the building of a substantial down payment over the period of the lease contract.

2. What is the difference from a Lease Option and a rental?

They both use the same type of rental contract, but a lease option also has an additional contract allowing this tenant to have the sole right to buy the home for a specific period of time.

3. Will I pay more for a Lease Option than a normal rental?

Yes.  The additional amount paid monthly is usually the minimum that will be applied toward the purchase of the home.  This is known as a "rent credit".

An example is that rents may be raised by $200 per month and this is the least that will be applied toward the rental credit.  (In many cases the rental credit will be even higher.)

4. Why is it so difficult to escape the "rent trap"?

Many people have become very accustomed to making rental payments and thereby never getting any benefits for doing so.  Becoming a home owner is still the American Dream.  In most areas of the U.S. a full mortgage payment is higher than a rental payment and this often scares people.

A sacrifice is often needed to take the step away from the "rental trap".

5. What if I am not ready to make this sacrifice?

If you are not ready to take the next step to home ownership then it is best if you stay a renter until you are ready.

6. If I wait what will happen?

Even though the current real estate industry is fluctuating, overall real estate prices go up.  Thus, one can expect that in the future you will be paying more for a home than you would today.

7. How much cash do I need to escape this "rent trap"?

That depends.  If you are wanting to buy then the average is 10% down or more depending upon how your credit is.

In our Lease Option program in Las Vegas the average is at 2% or less and credit is not an issue at all.

8. What is this "option fee"?

The option fee is the amount you put down to secure the rights to buy the home in the future.  In our program the full amount will be applied toward the purchase of the home.

9. On our site there is an "asking down payment".  What is this?

This is our site's terminology for Option Fee.

10. I have a dog/cat.  Is that okay?

Pets are welcomed (pit bulls and Rottweiler's can be an exception).  An additional  pet fee will often be assessed.  This pet fee is usually also applied toward your down payment.

11. How much will I have in credits to buy this home?

This depends on the home.  The usual can be easily calculated by:

Option Fee + (number of months in home) * (rent credit)

12. How long are your leases?

The normal lease is two or more years for the initial term.  Additional time can be added as needed for you to get your credit in order.

13. Can I put more money down?

Yes.  If this is part of the option fee then it will be fully applied toward the purchase.

14. Can I lower my monthly payment by putting more down?

Yes.  For every $100 less you want to spend monthly you must put the same amount down in the option fee.

Ex.: On a 1 year option you can put $1,200 more in your option fee and this will reduce your monthly by $100 for the first year.  The rental credit would also be reduced but the additional $1,200 would be on your option fee and fully applied.

15. What is the price at the end of the lease?

There are two standard methods of operations that we use.

1.) By at the appraised value at the time the option is executed; or

2.) Setting a price that is agreeable to both parties at the start of the lease period.

16. What are the benefits of each pricing?

1.) if you assume the prices may go down or stay the same as today then it may be best to go off the appraised value and thus making the best deal today.

2.) If you assume that prices may go up in the future then setting the price at a conservative value will give you equity in the future.

17. What happens if I go off a set price and it doesn't appraise for that amount in the future?

This is one of our most frequent questions we come across.  There are three possible solutions.

1.) Renegotiate with the Owner for a lower price.

2.) Renegotiate more time until the home does appraise for that price.

3.) Owner/Seller Financing at the agreed upon terms.

4.) Lastly, consider moving on to another home.

18. What about financing?  Will your owners help with any financing?

Many of our owners will consider assisting you with Owner Financing.  This means that your Landlord will now become your bank?

19. Can you guarantee me financing by outside sources / conventional banks?

No.  We cannot guarantee conventional financing.  That will depend upon you and your efforts during the leasing period.  We will give you contacts for Credit Repair.

20. Are you saying I have to get my own financing at the end of the lease?

Yes.  This is why you need to start on Credit Repair from the first day you move into the home.

21. What if I decide not to buy the home?

You will lose all of the rental credit and the option fee.  These monies are solely for use toward the purchase of the home.  If you fail to buy or decide not to buy, then these funds are non-refundable.

22. Will my mortgage payments go up?

In most cases Yes.  You will then be making a full mortgage payment depending upon your credit scores, current interest rates, etc.  Also, you will now be responsible for taxes, insurance and any local HOA (Home Owner's Association) dues.

23. What about tax benefits?

Only the owner receives tax benefits.  Thus, during the leasing period you don't get the tax benefits.  When you buy (or go through seller financing) you will then receive these benefits.

24. Can the owner sell the property from under me?

Ideally you are the sole person who can buy the home.  If an investor is selling to another investor then the second investor must honor the lease option agreement.

25. What are my responsibilities during the lease?

You will be required to make small (sometimes all) the maintenance on the property after your first 30 days.  In many cases you should opt for a Home Warranty and thus you are only required to pay a small deductible.

26. What if I just want to rent. Can i just do a rental?

No.  We do not do rentals.   Our purpose to aid people and families to realize the American Dream of home ownership.

27. Can I just buy one of your homes?

Maybe.  That depends on the owner.

28. What are my chances of succeeding?

Less than 20%.  The main reason that most people fail is due to the lack of motivation to work on their credit.  If you don't work on your credit then there is no way you will qualify for a loan in the future.  We will provide you with the tools you are going to need, it is up to you to actually use these tools.