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Want to buy, but money’s tight? Try a lease option

Looking to buy a home, but not sure, or unable to come up with the necessary down payment?

A “lease option” may be just the thing for you.

Bob Bruss from Inman News discussed it in a column, recently:

WHAT IS A LEASE-OPTION? A real estate lease of a house, condominium or commercial property, which gives the tenant the option to buy the property, offers both the tenant and landlord many advantages. Much like a new car lease, the renter has the choice of buying the property or not by the end of the lease term.

However, a lease-option is not the same as a lease-purchase. With a lease-purchase, the contract requires the tenant to buy the property, usually within a year or two. But a lease-option doesn’t force the tenant to buy.

Lease-options work especially well when the local market has either an oversupply of house and condo rentals and/or an oversupply of houses and condos listed for sale.

Why? Because you rent the house for a year or two, and, only then, if you like where you are, will you decide to buy (at the pre-determined price). You’ve already put money into the property, so you’ve built equity, while bringing the purchase price lower.

However, if you find that you can get a comparable home to the one you’re in, but for less money, you can just walk away, and buy the other house. (And, don’t forget, renters get a tax deduction on their Massachusetts state income tax return.)

Of course, an attorney should be consulted, in order to make sure your interests are protected.