Analyze any lease option or rent-to-own deal from both the buyer and seller perspective. See rent credits, effective purchase price, and projected equity.
A lease option (rent-to-own) is a creative financing arrangement where a tenant rents a property with the option to purchase it at a predetermined price within a set timeframe. A portion of the monthly rent is typically credited toward the purchase price, and the tenant pays an upfront option fee for the right to buy.
A rent-to-own agreement where a tenant leases a property with the right to purchase it at a predetermined price. Rent credits accumulate toward the purchase price.
Usually 1-5% of the purchase price. Non-refundable but credited toward the purchase if exercised.
The landlord keeps the option fee and all rent credits. This makes lease options attractive for landlords — they profit either way.