Whether your are a lease option investor, a real estate agent or a home seller or home buyer, anyone involved in a rent to own transaction has the same points to look out for in negotiation. I’m not going to cover all of the negotiation points here but I’ll focus on a few of them.
1. Monthly option credit - This wold be a portion (or all) of the monthly rent which is credit towards the purchase price ONLY if the tenant-buyer exercises the option to purchase. This credit is in no way mandatory, but can be very helpful to the buyer when it comes time to purchase. If a seller is granting option credits they need to have enough equity in the home to cover them
2. Monthly rent amount - Typically rents are priced at market rent or a little bit more on a rent to own transaction. However, this amount can always be negotiated to make it better for you.
3. End purchase price - the amount the buyer will actually pay for the home once they exercise the right to purchase. This final amount will determine the buyer’s new mortgage payments. It will also reflect the net proceeds for the seller. Most rent to own sales command a slightly higher purchase price, possibly as much as 5% to 10% more depending on the strength of the real estate market in your area.
Want to know more about key points to negotiate in rent to owns?
If you are a lease option investor you’ll want to read “Investing in Real Estate with Lease Options and Subject To Deals”
If you are a home seller or real estate agent you’ll want to read “Rent-to-Sell”
If you are a home buyer or real estate agent you’ll want to read “Rent-to-Buy” (coming soon)
All of these books are available on Wendy Patton’s website
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Before purchasing a property, primarily secure that you have enough source of income. Be certain that you have sufficient funds on a long-term basis to insure that you'll be capable of paying your monthly amortization.
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