There are usually two sources of Rent-to-Own (lease option) properties:
(1) Sellers: rent-to-own (lease options) work great in a down economy where a seller cannot sell a home by any other means. That would not be the current market â€“ Iâ€™ve not met a single seller in recent years willing to try this. When the market is going up as it is now, no seller will lock in a price for a lease option to be realized a few years down the road â€“ unless that price is WAY above current market value.
(2) Investors: there are investors out there who pick up a property for under market value, get the seller to carry financing and then charge a huge option fee up front to the person who is going to lease. Normally, the investor leasing to you has nothing out-of-pocket in the property and is actually hoping you will default so they can (i) keep the difference between what you pay per month and they pay to the actual owner AND (ii) your deposit.
Most arrangements of this sort:
(1) Ask for a large down payment as a lease option guarantee â€“ it is usually non-refundable and you risk losing it if you violate any proviso in the agreement or cannot buy out the option at the end of the term.
(2) Set a monthly rental amount that is much higher than a normal rental in the area.
(3) Have a set term and buy out (that is often unattainable â€“ causing you to lose your deposit).
These types of arrangements are always written in such a way as to benefit the seller (owner or investor). In reality, approximately 70% of lease-to-own options never happen â€“ therefore, since you pay a lot more per month and run the risk of losing all the extra money youâ€™ve paid, they are very risky propositions.
Most people look for lease options because their credit is trashed or they donâ€™t have a down payment saved up. Since most lease options require a large down payment, most people looking for this type of arrangement are automatically ruled out.
That leaves credit: take the time to get your credit straightened out â€“ there are no shortcuts and no one out there, no matter how wild their claims, can speed up the process. There are MANY scams out there. Operation Hope in Oakland http://(www.operationhope.org/oakland) is one great, legitimate option to get the help you need without paying someone crazy fees or getting ripped off.
Here is the link to another similar Q&A that may answer your questions: