Should You Pursue
Rent To Own Home in Houston To Purchase A Home?
By: Raynor James
The real estate market is a place where people can get very
creative. This brings us to the rent with option to buy programs you
see on the market.
Leasing is a fairly popular form of living arrangement since it
basically involves renting over a pre-set period of time, usually 3,
6, or 12 months at a time. Leases provide lower rates than a month
by month rent. However, when looking to lease, one will often come
across the "Lease Option."
A lease option
is essentially the same thing as a lease except that it provides the
option to purchase the property at a future date.
The option is just that, an option.
It may be an interesting offer for some Houston home renters,
but others will want to pass it up. The option does not have to be
taken, since there is a fee required to purchase the option.
Although the amount can vary, the fee is usually up-front and paid
when entering the lease. In general, lease options are offered in
times of slow real estate markets, since generally owners of
property look to simply sell during the hot times.
There are some definite advantages and disadvantages when it comes
to a home lease option. On the downside, the lease option is
rarely exercised and therefore it ends up being money wasted. Many
people pay the money thinking they will buy later and then either
lose interest or find they can't qualify for a mortgage. When this
happens, the money paid to purchase the option is lost and you will
be wondering what you could have possible been thinking when you
entered into the agreement.
An area where a lease option is commonly used is real estate
investment. In such a situation, a real estate investor believes he
or she can flip the home in a short period for a profit. They find
the lease option to be very attractive because it allows them to
secure the home without dedicating significant cash resources to the
deal. Once they purchase the option, they then start hunting for a
buyer that will pay more than the seller is looking for in the
original sale. If the investor can pull it off, they exercise the
right to buy and immediately sell to the third party. In many cases,
the two transactions will happen at the same time! This leaves the
investor with a smile on their face and the original seller in a
grumpy mood.
As with anything, there are upsides and downsides to a lease option.
For investors, it makes sense in many situations since it frees up
cash flow. For people looking for a place to live and raise a
family, it rarely makes sense.
About the Author:
Raynor James is with
http://www.fsboamerica.org - fsbo homes for sale by owner. |
