How to Lease-Purchase a Home

Learning how to lease-purchase a home successfully could potentially benefit you. Here are the basics of a lease-purchase and how to complete one successfully.

What Is a Lease-Purchase?

A lease-purchase is a financial transaction that allows you to lease a property initially and purchase it at a later date. This can be a good way to secure a property for a certain amount of time even if you cannot afford to purchase it currently.

Locate a Home

You will first have to locate a home that is available for a lease-purchase. Many times, home sellers will list this as an option with their homes. You can sometimes find ads in the classified section that advertise lease-purchase availability. You can also simply ask a home seller if she would be open to the idea of a lease-purchase. If the real estate market is down, you will typically be able to find more people that are open to the idea of doing a lease-purchase agreement.

Pay Option Money

Once you have located a seller that likes the idea of a lease-purchase agreement, you need to come to terms on the amount of option money that will be required. In order to get the seller to agree to sell the property to you in the future, you will have to give her a certain amount of option money. This amount is completely negotiable and will depend on how much money the seller thinks she should get. In some cases, this can be a substantial sum of money. Once the sum is agreed upon, you will need to pay the money up front.

Agree on Purchase Price

You will also need to agree on the purchase price of the property with the seller. Since you will be purchasing the property in the future, this could potentially be beneficial for you overall. If you can agree to a price that is similar to what you would pay in today's market, you might be getting a nice deal when you actually purchase the property. However, the seller will also be considering this, so you will have to negotiate this price.

Negotiate the Lease

You will also have to negotiate the terms of the lease agreement. You need to determine how long you will be leasing the property before you purchase it. Many times, this can vary from one to three years. You will also have to determine how much money you will pay in rent. Typically, a portion of each rent payment will be applied towards the purchase of the property. Therefore, you will have to determine this amount in advance.

Maintain the Property

While you are renting the property, you will most likely be in charge of maintaining the property. You may be required to pay taxes and insurance on the property as well. Then, at the end of your lease term, you should be able to purchase the property.