Blue Flower

What is a lease option?
A lease option is the term used to describe a lease with the option to purchase the leased property at some point during or at the end of the lease. Sometimes called a “rent to own” arrangement, a lease option allows a prospective purchaser to rent the property that they wish to buy for a fixed monthly rental while locking in both the purchase price and the exclusive right to purchase the property during the term of the lease. The buyer is not obligated to buy the property, and if the lease term (typically one to two years) expires without the option being exercised, the option expires. Typically there is no down-payment due from the purchaser at the beginning of the lease term, and the prospective purchaser can begin living in the home having paid the 1st months rent and a security deposit, just like a normal lease. If the prospective purchaser elects to buy the home, the security deposit and a portion of the monthly lease or rent payment may be applied to the purchase price of the property.

Why lease option through Florida Real Estate Associates?
At Florida Real Estate Associates, we own and manage all the properties that we lease option, and we agree as part of our lease option to finance the property being leased to the prospective purchaser. This means that a prospective purchaser does not have to obtain financing from a bank in order to exercise the option. Instead, having seen that the prospective purchaser has made their monthly payments on time, we agree to give the purchaser a mortgage to buy the property without requiring an extensive credit history, and we can be flexible in offering loan terms to borrowers who might not otherwise qualify for a bank loan for any of a number of reasons. The loan is structured in such a way that the monthly payment is the same or very close to the monthly lease payment, and generally for a term of 30 years, with no prepayment penalty.

What's the catch?
There is no catch – but there are a few things to be aware of. The properties we lease option are in “as-is” condition. Whatever repairs and maintenance are necessary are the responsibility of the prospective purchaser, unlike a standard tenancy. We will often give a credit for the cost of the repairs towards the purchase price, however this is determined on a case by case basis, and the prospective purchaser will have to provide us with receipts, proof of repairs, photographs, etc. Some of the properties require only some cleaning and paint, some may require structural repairs, and some are perfectly ready for occupancy. We ask that all prospective lease-optioners inspect the properties carefully before making a decision. You may also find that the lease option purchase price is slightly higher than one might find a similar property for in the open market. Clearly if a prospective purchaser had their own purchase money or had bank financing already, we would consider any reasonable offer, however we do set a price on a lease option sufficient to cover the risk of taking the property off the market for the duration of the lease and offering favorable terms without an initial down payment or a favorable credit rating.