Bands, Home Buyer in Oxford, MA

should an owner offer lease to own currently rented property?

Asked by Bands, Oxford, MA Tue Apr 8, 2008

We have a home that has been off and on the market for 4 years, the market has stalled in our area significantly. Should we consider an lease with option to buy. What are the benefits for us as the owners? The tenants are willing to do the upgrades at their expense with our approval. If we do not do this the house will sit empty.

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About 2 years ago the market was headed south and people were offering their homes with boats and cars and all sorts of toys just to get out. Those people were proactive and most sold. Those who are STUCK for whatever reason need to find a reasonable way to "make the numbers work". I went to the library and read several books on real estate in the 90's. Specifically looking for what worked for other professionals in the business to grow and make it to now. The bottom line... they got creative.

So YES, based on the information you have given, the lease option to buy is what I would recommend. Especially since it sounds like you have a prospect interested in the deal.

PLEASE NOTE:There are a few specific contingencies I have recommended to my clients considering this route. These should be met prior to the new tenant/buyer moving in. I would be happy to discuss these contingencies at your earliest convience. Check out my website anytime.
0 votes Thank Flag Link Wed Apr 9, 2008
First off, the home doesn't have to sit empty, you could simply rent it out and wait for the market to correct itself and then try and sell.

That said, I actually think the lease with option to buy is a great idea in this market. I have had a couple buyer clients ask me about deals like these specifically.

Worst case scenario is you have your house rented, best case scenario is you have locked buyers into a price that is higher than what the market values are at the time of sale.

There are a number of factors that go into this, a lot of variables, all of which I can't cover on here, but generally with rent/option to buy you have 2 choices: 1) option to purchase at X date for X price, or B) right of first refusal (at X date lease ends and they have the right to buy for a negotiated price with their allocated rent from the last year or 2 going towards the purchase price). In both cases the rent money goes towards the purchase price so essentially the buyers are buying an option (putting a deposit down), which is a great set up for you.

The first scenario is not a bad thing for you unless the market goes up and they are locked in at a lower price, but in my opinion, unless the option is for 4 years from now, I don't think you will see a crazy spike and lots of potential money lost. The second scenarios downside would be there is the chance they would "refuse" to buy the property at X date (when lease is up) but the positive is that you still will have gained the rent during that time.

Hope that helps. Good luck!
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0 votes Thank Flag Link Wed Apr 9, 2008
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