Key in Hand Rent to Own Lease PurchaseRent-to-own is a real estate term relating to a real estate agreement which is composed of a rental lease and a purchase agreement where the tenant has the option to purchase the property at a fixed price at a specified point of time in the future. It is also known as lease to purchase option, lease option, a type of owner financing or lease-to-own. The lease resembles that of a typical rental lease where the land owner, the lessor, allows the other party, the lessee, to occupy the property in return for a monthly payment. The option to purchase the property usually states the price at which the property is to be bought and the time period during which the tenant is able to exercise the option.

Rent to own contracts typically become more popular during housing market downturns as property sellers may need to vacate the property before it can be sold, and landlords may use them as a way to find good tenants. A homeseller may attract the tenant by having a specified portion of the rent applied as a credit toward a down payment on the house, or may receive a bulk sum of money for the option giving the tenant time to rebuild their credit if necessary.

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The concept of rent to own is not new, but with the credit markets and housing crash, these contracts are becoming much more popular. If you are a buyer/tenant interest is a rent to own or lease purchase agreement, we are going to outline costs involved in a rent to own transaction, how to prepare yourself and where to look for these types of homes.

Costs associated with a Rent to Own (Lease Purchase)

  • 1 1/2 Month Security
  • One Months Rent
  • Realty Fee, which tends to be one month’s rent or 10% of the Gross Annual Rent (Tenants typically pay the realty fee, although some homeowners can and do split or pay for the realty fee).  
  • Home Inspection ($350-$450).
  • Attorney Review ($750-$1500).

Rent to Own Screen Short of CraigslistWhere to find Rent to Own Homes or Lease Options on Houses

  • On the MLS. Real estate agents like me and/or other Realtors have access to the MLS, where rental property listings will specify if they are offering a rent to own or lease purchase option. If you are looking in the North Jersey Region (Union, Essex, Morris, Passaic, Somerset, some parts of Hudson, Middlesex County, you will want to speak with an agent that has access to Garden State MLS like me). Middlesex County has their own MLS as well.
  • Craigslist (North, Central and South Jersey). Use the keyword phrase Rent to Own.
  • Rental Listings with specific remarks on rent to own or lease options

Gather the Following Documents

  • 2 of Your Most Recent Paystubs
  • W-2s or Tax Returns
  • Credit Report (you can get a free copy of your credit report here).
  • Explaination of Your Why Your Credit History is Not Favorable.
  • References (Personal or Business).

Pros and Cons for Both Buyers/Tenants



  • Buyers and Tenants can “test out” a community before making a commitment to buying or living in a specific area.
  • If you find that you do not like the home, you are not obligated to buy/own it.
  • Peace of Mind
  • Possibly More Privacy and Space
  • Quality of Life
  • Establish Good Rental History
  • Time to Build Credit


  • Upfront Costs
  • You might pay more money in the long term if you decide not to buy
  • Less than 7% of all Real Estate Residential Listings Entertain Lease Option Purchase Agreements
  • You may or may not be responsible for upkeep of the home
  • You may forfeit your escrow account, if you have one in your contract, which constitutes a good portion of your down-payment if you decide not to buy

Post By Audeliz Angie Perez (160 Posts)

Angie Perez is a NJ Circle of Excellence award winning real estate agent for Re/Max Select in Westfield NJ. She sells anywhere from 12-25 houses per year on a consistent basis since 2005. Ms. Perez is primarily a buyer's agent on 60% of her real estate sales where she represents rental income investors, first time home buyers & trade up home buyers of 1-4 family homes within specific towns encompassing 4 NJ counties: Union, Essex, Middlesex and Somerset County. Many of Ms. Perez's clients appreciate her ability to negotiate favorable real estate deals for them. Many of her clients commented that her research abilities, her honesty, her knowledge of local market trends and her proficiency to manage multiple real estate transactions from start to close are some of the reasons why she was hired as their agent of choice. Please call, text or email Angie Perez to ask if she lists or sell in your town. If she can not help you, Ms. Perez would be more than happy to help or refer you to someone who can.

Website: → NJ Real Estate For Sale




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