Ups And Downs Of Lease Purchase In Real Estate

Today I talk about some of the positives and negatives of a "lease purchase" (also usually known as "rent to own") transaction in real estate. I get a fair number of these inquiries and most of them are from potential home buyers facing poor credit scores for a few years, generally from a recent foreclosure. I received a question from a listing client yesterday about whether it would be a good idea to discuss a lease purchase with some coworkers who seemed nice.

The basic idea is that the buyer and seller write up a contract that allows the buyer to rent the property for a specified period of time, after which the renter/buyer would qualify for a mortgage and close on the home. During the rental period a portion of their rent payments may be allocated towards reducing the ultimate purchase price.

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