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Q:
What
is a lease option?
A:
When
a renter signs a lease with an option to purchase
the property for a specific price within a certain
time frame, that is called a lease option. In most
lease-option situations, a portion of the rent is
applied to a future down payment. Lease options are
most popular among buyers who don't have enough funds
for a down payment and closing costs.
Q:
Where
do I get information on lease options?
A:
For
information on lease options, "How Lease Options Benefit
Realty Buyers, Sellers, Agents and Investors" is available
for from Tribune Media Services, 435 N Michigan #1500,
Chicago IL 60611. 1-800-245-6536,or "Publication House",
Burlingram CA. 1-800-736-1736
Q:
How
do lease options work and what are the benefits?
A:
Most
lease-option agreements specify that a portion of
the rent on the property in question is applied toward
the purchase if the option is exercised. This is referred
to as rent credit. Institutional lenders accept rent
credits as part of the down payment if rental payments
exceed the market rent and if a valid lease-purchase
agreement is in effect, a copy of which must be attached
to the loan application. For sellers, lease options
give them several advantages, especially in a slow
market. These include a monthly rent higher than market
rent, top-market value for the property and tax-free
use of the option consideration until the option expires
or is exercised. Also, the renter is more likely to
treat the property like an owner, tax-free use of
option consideration until the option expires or is
exercised. Lease-options should be read carefully
for details on transferring the option and other important
concerns.
For more information, get a copy of "How Lease- Options
Benefit Realty Buyers, Sellers, Agents and Investors,"
available for $4 from Tribune Media Services, 64 E.
Concord St., Orlando, FL 32801.
Copyright
1999 Inman News Features
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