AgentMortgage

Making a lease-to-own sale worth your while

It's possible for sellers to earn a 10 percent return on investment

A lease-to-own (LTO) transaction is one in which a potential homebuyer occupies the home as a tenant but has an option to purchase it within a specified period at a specified price. In exchange, the potential buyer pays a nonrefundable option fee upfront plus a monthly rent. In a recent article, I noted the intense interest in LTO deals today by wannabe homebuyers who can't qualify for the mortgage they need to make a purchase now. Despite the large demand, not many LTO deals are being done. They are very complicated, and most potential buyers and sellers don't know where to go to get help. Further, most sellers view the LTO as a last resort rather than as a potentially profitable investment. In addition, there is no marketplace where potential buyers and sellers can connect. To deal with these problems, I developed a three-part plan. Part 1 focusing on contractual complexity was to develop with Jack Pritchard a checklist of all the major provisions that might be included in...