Property appreciation. In a lease to own, the parties lock in a future selling price for the home. If the home appreciates faster than expected, the buyer receives a “deal” while the seller misses out. (CON) Difficult to make a home purchase – By leasing the property instead of selling it, the seller won’t have the cash they would likely need to purchase another home. This point doesn’t apply to those who are affluent and/or own more than one (1) property. (CON) Uncertainty – Sellers can’t rely on the tenant to purchase at the end of the lease (unless they decide to use a lease-purchase agreement). Buyer – Pros & Cons (PRO) Secure a price – During negotiation, the buyer and seller will agree on a price point for the home. If the buyer locks in a good rate, they can end up buying the property below market value. (PRO) Helps build credit – Renters that can’t qualify for a loan due to poor credit can use a lease-to-own to build their credit until it’s time to purchase. (PRO) Allows buyers to test the property/location – If the buyers aren’t 100% sure if the location/home is right for them, but they want to take a step towards purchasing, they can “test” to see if the spot is right for them. (CON) Property depreciation – During the course of the lease, the property’s value could fall. Because the purchase price has already been locked in, the renter can buy at a higher price or walk away and forfeit the option money accumulated. (CON) Lost option fee & rent premium – If the tenant decides to walk away from purchasing, the portion of rent that has gone towards a down payment (rent premium) and the option fee is kept by the owner. This can amount to thousands of dollars of lost money. (CON) Utility/repair costs – Because the responsibilities for taking care of the property are typically on the tenant, leasing-to-own can be significantly costlier than just renting. (CON) Dependent on the owner – If the owner has a mortgage on the property and they stop making payments, they could lose the property. The same applies to property taxes. Lease-Option vs. Lease-Purchase While very similar in concept, a “lease option” and a “lease purchase” are both types of rent-to-own contracts that differ in one important factor: the tenant’s obligation. A lease option provides tenants with the option to purchase the residential property at the end of the lease, whereas a lease-purchase binds the tenant to purchase the property for a predetermined price. In other words, a lease-option allows a renter (buy...
Property appreciation. On an annual basis beginning on the date one year from the date of this Agreement, the Collateral Value shall be increased using the Turkey Consumer Price Index (“CPI”). When this determination is made, the principal amount of the loans described in Paragraphs 3 and 4 shall be modified to reflect the increase in value.
Property appreciation. In a lease to own, the parties lock in a future selling price for the home. If the home appreciates faster than expected, the buyer receives a “deal” while the seller misses out. (CON) Difficult to make a home purchase – By leasing the property instead of selling it, the seller won’t have the cash they would likely need to purchase another home. This point doesn’t apply to those who are affluent and/or own more than one (1) property. (CON) Uncertainty – Sellers can’t rely on the tenant to purchase at the end of the lease (unless they decide to use a lease-purchase agreement). Buyer – Pros & Cons (PRO) Secure a price – During negotiation, the buyer and seller will agree on a price point for the home. If the buyer locks in a good rate, they can end up buying the property below market value. (PRO)
Property appreciation. In a lease to own, the parties lock in a future selling price for the home. If the home appreciates faster than expected, the buyer receives a “deal” while the seller misses out.
