A creative way to lease a home without taking responsibility for maintaining it is to offer it for sale as a Lease-Option. A Lease-Option is done by essentially leasing a home and selling the tenant an 'option' to buy the home at a later date for an agreed upon price.

Typically the tenant pays an option fee (down payment) of 3-5% of the agreed upon sales price and then pays a slightly higher than average monthly rent of which a portion (10-15%) is credited toward the future purchase. The tenant also agrees to pay for all maintenance and repairs (beyond what insurance might cover).

The disadvantage to offering a home for lease-option is that, like leasing, the tenant may stop paying rent, damage the property, and/or never exercise their 'option' to buy the property. This happens about 70% of the time, by the way.

It is also important to understand that these are complicated transactions that are strictly regulated by state laws that restrict how these transactions can be structured. Because of these laws, most investors are no longer selling properties using this technique, and New Dream Home Solutions recommends against selling this way. If, however, this strategy is ideal for a particular seller, New Dream Home Solutions can structure this type of transaction.

Questions

What are the alternatives?

Instead of doing a lease option, the owner may choose a different strategy such as selling with owner financing, selling subject-to, or selling with a wrap-around mortgage.