Using a Lease Option or Rent-To-Own

A lease option, also referred to as rent-to-own, is a transaction that includes two agreements:

  1. The first agreement, the lease, is a rental agreement between you and the owner. If possible, get the seller to agree on having a portion of the monthly rent go towards the balance you owe on the property.

  2. The second agreement, the option, states that the owner agrees to sell you the property at a specific price within a certain time-frame. The owner cannot sell the property to anyone else until the time limit is up or change the price of the property.

Becoming an owner-occupant is a good option if you want to invest in a home you plan on living in before turning it into a rental property. You usually have to live in the property for at least a year before you can rent it to someone else. The down payment usually corresponds to 20% of the value of the property, but you might be able to negotiate better terms with the seller.

You can build a solid portfolio by purchasing a new rent-to-own property once a year. Revenue from your rentals will add up and provide you with the capital you need to make down payments on new properties.

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