Lease Option

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Dictionary Says

Definition of 'Lease Option '

An agreement that gives a renter the choice to purchase a property during or at the end of the rental period. As long as the lease option period is in effect, the landlord/seller may not offer the property for sale to anyone else.

When the term expires, the renter must either exercise or forfeit the purchase option. A lease option gives a renter/potential buyer more flexibility than a lease-purchase agreement, which requires the renter to purchase the property at the end of the rental period.

Investopedia Says

Investopedia explains 'Lease Option '

The property owner may charge the renter a premium for the option to purchase the property, perhaps in the form of higher (above market value) monthly rental payments. The property owner may opt to apply some of the higher rental fee toward the purchase price if the renter exercises the option.

Any premium will likely be forfeited if the option is not exercised. The term of the option may be any period on which the property owner/landlord and potential purchaser/renter agree, but is commonly one to three years. The lease-option property's purchase price may be determined either at the outset of the agreement or at its conclusion.

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Search results for

'Lease Option '

  • Rent-To-Own Real Estate Full Of Pitfalls

    http://www.investopedia.com/articles/mortgages-real-estate/08/rent-to-own.asp
    ... It's called "renting-to-own" or a "lease option". ... You may buy the property at any
    point during the rental period up until the lease option expires. ...

  • Rent To Own; Own To Rent

    http://www.investopedia.com/articles/mortgages-real-estate/09/real-estate-purchase-options.asp
    ... The differences between the basic option, the lease option and the lease purchase
    option should be understood by anyone contemplating using them as a financing ...

  • 4 Alternatives To A Traditional Mortgage

    http://www.investopedia.com/articles/mortgages-real-estate/10/mortgage-alternatives.asp
    ... 4. Rent To Own/Lease Option A rent-to-own arrangement, also called a lease option,
    lease to own or lease to buy, allows a homebuyer to rent a property for a ...

  • New Wheels: Lease Or Buy?

    http://www.investopedia.com/articles/pf/05/042105.asp
    ... Most consumer groups suggest that the closed-end lease is the best option, because
    it poses less risk upon the expiration of the lease term. ...

  • The Ins And Outs Of Seller-Financed Real Estate Deals

    http://www.investopedia.com/articles/mortgages-real-estate/10/should-you-use-seller-financing.asp
    ... Real estate investor Don Tepper of Solutions 3D LLC says, "There are actually dozens
    of other ways to buy: lease-option, lease-purchase, land contract ...

  • Build Your Small Business During Downswings

    http://www.investopedia.com/articles/pf/08/small-business-recession-tips.asp
    ... flow and tax treatment. Cash Flow: In the short term, the lease option
    frees up cash for other purposes. In other words, you are ...

  • CFA Level 1 Study Guide - Liabilities - Determining The Value Of ...

    http://www.investopedia.com/exam-guide/cfa-level-1/liabilities/lease-asset-value-determination.asp
    ... Leases; 9.18 Determining The Value Of The Lease And The Lease Asset; 9.19 ... 15.32
    Straddles and Strangles; 15.33 Option Prices and the Time to Expiration; 15.34 Put ...

  • Why might a bond agreement limit the amount of assets that the ...

    http://www.investopedia.com/ask/answers/09/bond-covenant-lease.asp
    ... as a capital lease if one of the following criteria is met: there is a transfer
    of ownership; there is a bargain purchase option in the lease; the lease life ...

  • CFA Level 1 Study Guide - Derivatives - Option Prices and the Time ...

    http://www.investopedia.com/exam-guide/cfa-level-1/derivatives/option-prices-time-to-expiration.asp
    ... Leases; 9.18 Determining The Value Of The Lease And The Lease Asset; 9.19 ... 15.32
    Straddles and Strangles; 15.33 Option Prices and the Time to Expiration; 15.34 Put ...

  • Should You Buy Property On Leased Land?

    http://www.investopedia.com/articles/mortgages-real-estate/08/leased-land.asp
    ... while you may not live in this home for the rest of your life, it's nice to have
    that option. And if you sell the home, a long remaining lease term will ...

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