Leasing a property can be a beneficial option for purchasing Los Angeles real estate. Leasing differs from renting in that a lease is a fixed-term contract in which nothing can change; renting is used temporarily and the terms can change at any point in the renting agreement.
If you do not have the proper credit scores or employment history to qualify for a mortgage or home loan, a lease option (also frequently known as the rent to own option) can help you to buy the home that you want. This provides the option to buy the home after the lease is completed. There are no specific requirements to get approved for a lease option, as it is operates more an agreement between the homeowner and the leasee than a contract made in a bank.
In order to enact a lease option, the leasee (or person leasing the property) must provide a down payment of sorts. This ranges from a month or two of advanced rent up to around 5% of the home’s purchase price. If you have discussed the lease option with a homeowner and they have agreed to it, it is important to have the home inspected before the lease is finalized to make sure that there are no underlying problems with the home.
Everything about a lease option can be negotiated before the lease is signed. However, once the paperwork is completed, you are locked into the contract. The monthly payments, purchase price, initial option money (or down payment), and the term of the lease are all negotiable between the homeowner and the leasee.
To protect yourself while leasing, be it for business or residential purposes, there are certain protections that can be included in the lease contract. These protections can be enacted if, for some reason, you are unable to stay throughout the lease term. A sublease option will allow you to sublet the property to another business or resident if you are unable to stay out the lease. This is typically used in business leases instead of residential, as are the exclusivity and co-tenancy optional clauses.
Leasing is a wonderful option for business and can be very helpful to first-time home buyers who do not qualify for mortgages or home loans through a lender.