1. What is Lease To Buy For Seller?

A lease-to-buy (or rent-to-own) agreement allows a tenant to rent a property with the option to purchase it later. For sellers, this arrangement provides rental income while potentially securing a future sale.

2. How Does the Calculator Work?

The calculator uses the lease-to-buy formula:

Where:

• \( Total\ Rent \) — Sum of all rental payments during the lease period
• \( Option\ Fee \) — Non-refundable fee paid for the purchase option
• \( Credit \) — Portion of rent applied toward purchase price

Explanation: The equation calculates the net cost to the seller by combining rental income and option fee, then subtracting any credit given to the buyer.

3. Importance of Cost Calculation

Details: Accurate cost calculation helps sellers evaluate the financial viability of lease-to-buy agreements and compare them with traditional sales.

4. Using the Calculator

Tips: Enter all amounts in dollars. Total rent should include all payments during the lease period. Credit is typically a percentage of rent applied toward purchase.

5. Frequently Asked Questions (FAQ)

Q1: What's a typical option fee percentage?
A: Option fees typically range from 2-5% of the property's value, but can vary based on market conditions.

Q2: How is rent credit usually determined?
A: Rent credits often range from 10-25% of monthly rent, applied toward the purchase price if exercised.

Q3: What are tax implications for sellers?
A: Option fees are generally taxable when received, while rent credits reduce the final sale price for capital gains purposes.

Q4: When does lease-to-buy make sense for sellers?
A: In slow markets, with hard-to-sell properties, or when seeking steady income with potential future sale.

Q5: What happens if buyer doesn't exercise option?
A: Seller keeps option fee and all rent payments, with no obligation to sell.