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The Pros And Cons Of Obtaining A Lease To Buy Agreement On Your Next Home Or Apartment?
A lease to buy agreement, also known as a lease purchase or a rent-to-own, is when a tenant rents a home or an apartment that offers the choice of purchasing the property during a pre-determined time period. During this time period, which is usually around three years, the tenant may choose to purchase the property at the price that is set at the time of leasing.
However, during the time that the tenant is only leasing the property, he or she will be required to pay a one time “option fee”, which is 1% to 5% of the price of the property. This option fee will then be deducted from the price of the property if the tenant does decide to purchase. Additionally, the tenant will also be required to pay a monthly rent, along with a rent premium. This rent premium will also be deducted from the price of the home if the tenant decides to purchase the property. Unfortunately, if the tenant does not decide to purchase, he or she will not be refunded the option fee, nor the rent premium.
There are a number of benefits to obtaining a lease to buy agreement. One benefit of these agreements is that a tenant may use the leasing period to build his or her credit while deciding to officially purchase the property. That way, if a tenant does decide to purchase the home, he or she will then have the credit needed to obtain a beneficial home loan. Additionally, while the tenant is building their credit, they are also building equity in the home. This places them in a better overall financial standing if and when they decide to purchase the property.
Unfortunately, there are also disadvantages to obtaining a lease to buy agreement. The main disadvantage is that neither the option fee, nor the rent premium are refundable if a tenant decides not to purchase the property. These extra fees will then just be lost funds that would have been saved had the tenant entered into a traditional leasing agreement. This is why it is important to consider the pros and cons of obtaining a lease to own agreement before entering into such a lease.
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Apartment For One?
There are many pros and cons of apartment living that must carefully be examined before making the decision to rent an apartment. For many, the decision is a no-brainer. Apartment rentals are not for everyone though so before becoming locked in to a year long lease agreement, it is best to consider such factors as needs, expense and location. For single, childless individuals who don’t want to be bothered with the hassle of mowing the yard, shoveling the snow or replacing appliances, renting an apartment is by far the best option. In most instances, unless otherwise stated in the rental agreement, the landlord is responsible for the general maintenance and landscaping of the apartment. Replacement of appliances, plumbing issues or flooring or roofing problems fall under the landlord’s expense as well. The expense of renting an apartment is significantly less than puchasing a home as well. The building owner is responsible for all property taxes. In many instances, the property owner takes on other property fees, such as trash disposal or water usage. Again, these terms are typically dictated by a lease agreement. Moving becomes much easier when renting an apartment as well. Issues that present to home buyers, such as inspections, realtors and securing a mortgage, disappear. Typically, for an apartment rental, the first month’s rent and one month’s security deposit are all that is required for move in, making apartment living less financially stressful than purchasing property. Another thing to consider regarding apartment renting is the type of facility that best suits the renter’s needs. Options range from an inidividually rented duplex where the owner may be residing below the renter to large apartment complexes, with onsite maintenance and even fitness facilities and swimming pools. Some apartments may be rented already furnished, further saving the renter costly decorating expenses. Agreements for apartment rentals are typically flexible as well and typically range from a few months at a time to a year or longer. This gives the renter a greater mobility than a property owner as well. As indicated, there are many reasons to consider renting an apartment. The choices are practically limitless.
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A car lease often has very cheap montly payments. The big negative, however, is that you never truly own the car. You will either have to give it back when the lease ends, or buy it then, which would be more expensive than buying it earlier.
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