What is the difference between Rent to Own and Lease With Option to Buy? Which is better and wiser?

Asked by Clari, Wed May 16, 2012

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Alma Kee, Agent, Tampa, FL
Wed May 16, 2012
You absolutely need to hire your own attorney to review any lease option or lease with an option scheme.

Unfortunately there are fraudsters that owe more than the property is worth and yet they dupe buyers into signing a lease-option or rent-to-own agreement. Then what can happen is the "buyer" would pay above market rents and also have to make any repairs. After a few months or maybe longer, the bank will foreclose and the seller will then tell you have to allow Realtors in to show for a Short Sale.

For this reason, it's crucial that you have a Real Estate attorney review your contract and also perform a title search to discover all liens (mortgages).

If you have credit issues that are preventing you from getting a regular mortgage, you may want to try:


Also if you have verifiable income and a large downpayment, you may be able to find a credit union to lend you money.

All the best,
Alma Kee
Westchase Office
Future Home Realty
1 vote
Or go to the court house and see how much owed! Talk about crook.
Flag Tue Jul 29, 2014
Erek Kirsten, Agent, Tampa, FL
Wed May 16, 2012
Clari, Everything is negotable and you can structure many kinds of documents to accomplish the same ends. Whether it is a Rent-to-Own, Lease/Option, Contract for Deed or Seller Finacing. You didn't specify which end you were on. Though both parties can be adequatly secured in all of the above. In the end, done properly, there can be little, if any difference between them. So though it's a bit silly, it usually boils down to the words people are comfortable with.
0 votes
Lisa Reeves, Agent, Tampa, FL
Wed May 16, 2012
Rent to own or lease option both have their separate issues. However - I would say that lease option to buy would be your best option since at the end of the lease all you lose is your down payment if you cannot pay. Rent to own, also known as payment for deed, does not give you any protection - such as a lease - and you could spend years paying on a property to find out that there are other liens etc that you were not counting on that you have to pay to receive the title. This happened to a small church that ask for my help. The owner was foreclosed on another property and the bank put a lien on the property so that when they finally tried to finance it into their name and take title - they couldn't.

A lease option while a smaller time frame also relies on the property owner keeping the property free and clear and putting some of your funds towards your down payment or your closing costs. In exchange you will put down a larger non-refundable deposit, usually around $3-5,000. Make sure you have a lawyer review the property and the documents before you move forward. If you making this option because of your credit - make sure you do credit repair so you are ready to finance and not stuck with financing issues. Good-luck
0 votes
Jana Hristova, Agent, Tampa, FL
Wed May 16, 2012
You have to ask yourself why would anyone sell you a house with rent-to-own or lease option (same thing). Right now, the market is good, well priced properties are selling with multiple bids.
The answer usually is: the house is overpriced.
Every real estate transaction can be good for both parties, just make sure you do your homework before you sign anything. Consult a lawyer.
If you decide to do lease with option or rent-to-own, check the owner, make sure they are not in foreclosure or they are not late with their payments, check the title and finally make sure you are paying a decent price.
0 votes
Lauren Rodri…, Agent, Tampa, FL
Wed May 16, 2012
Basically, they are one in the same thing with slight differences.

A lease to purchase option holds the buyer to an obligation to buy the home at the end of the predetermined lease period. One drawbrack is that the predetermined price may be higher than the value of the home when it comes time for the purchase. Also, lease to own generally requires a large downpayment that is forfeited if the purchase is not completed at the time determined. However, lease to own is a good, viable option for someone whose credit is not good enough to qualify for a standard type mortgage loan.

A rent to own agreement has a bit more flexibility. Generally, a predetermined amount of the rent per month is credited to the future buyer as a "down payment" towards the purchase when the time comes to purchase. However, if the purchase does not happen, the renter is not refunded any of the credited amount.

As to better or wiser, it all depends on what the terms of the agreement are to be as to whether or not it is a good and viable option for you. I always advise my clients who are considering either of these as a home purchase option, to hav the contract reviewed by a real estate attorney to determine any legal recourse the buyer/renter may have. I have seen this save my clients thousands of dollars down the road.

If I may be of further assistance, please email me at myrealtorlauren@gmail.com

Lauren Rodriguez is licensed in Florida for real estate. Van Wert Real Estate Services, LLC
0 votes
Pamela Guert…, Agent, Tampa, FL
Wed May 16, 2012
Rent-to-own typically increases your rent payment over a specified number of years to create a down payment with a date to purchase whereas a lease with an option allows you more flexibility by having a CHOICE to purchase it at a later time at a predetermined price.
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