LEASE TO OWN PROGRAMS:  DO THEY REALLY WORK?

Published 07-12-2019 By Rico Castillo

Yes, lease to own programs work.  I wanted to get that out of the way.  I know you’re asking that question.

However, you need to know the terms before getting into one.

What is a Lease To Own Program?

Just as the name suggests, you lease a home and you have the option to buy it from the owner at a specified time in the future for a specified amount.

There are a lot more to it though.

Lease To Own Programs - The Old Way

I’m willing to bet that when you hear the words least to own, you immediately think, Rent-to-Own, right?  That’s because it is the same. 

The old way: 

  1. You dealt with the owner directly
  2. You’re only dealing with that one particular property.
  3. You were asked to put a large down payment
  4. You were asked to pay a higher-than-market rent and supposedly, the extra rent will go towards your down payment when you exercise your option to buy the property.
  5. You agree that down payment and extra rent is NON-refundable
  6. You have to buy the property no matter what the market value is.

If the market value of the property is much higher than what the market says and for what your purchase price is from the seller, then you will stand to make a very good deal.

Guess what?  I am willing to make another bet that the seller will be calling before your exercise date and try to get you out of the property so they can keep the equity.

There are other terms not listed here, but those should be enough to scare you.  The fall through rate or the chance that the lessee or would be buyer of buying that home in the future is over 90%. 

How d’ya like them apples?

Can't I Sue?

I’ll answer another question that I know you’re thinking about … Yes, the attorneys are making a killing on these types of deals.  

There are so many lawsuits on lease to own contracts that some attorney out there owns a home in Los Gatos, next to one of the Sacramento Kings player - just from dealing on these types of contracts.

Because of these types of transactions make it in the news quite often, it has given the term Lease To Own a negative connotation.

Rest easy, my friend.  If you think this is a way for you to get into a home, then I have good news for you.

Introducing …

Lease To Own Programs - The New Way

The new way:


Home Partners of America - just one of the ways to do lease to own.


Did I make that a little too dramatic?  I hope so, because the new way rocks!

  • The companies doing these are very transparent and upfront.  
  • You’ll know what your rent will be. 
  • You’ll know what your purchase price will be.
  • You do not have to put a large down payment (most times, you just need 2 months rent)
  • YOU CAN CHOOSE HOMES THAT ARE ON THE MARKET as if you’re a regular buyer (with some restrictions)
  • Some programs require you to pay for the inspections and put down an initial down payment once the offer is accepted and some don’t.
  • You DO NOT have to move forward with purchasing the home.

The key to the new lease to own programs is transparency.  They want you to know all of the numbers in advance so you’ll know what your rent amount will be for year 1, year 2, etc.

You’ll also know what your purchase price will be on year 1, year 2, etc.

The best thing about the new lease to own programs is that you’re only obligated to the lease term.  You don’t have to go through with purchasing the property if you don’t want to.  

Their goal is to have you actually buy the home that  you’re leasing.  That’s the reason why they want you to go out with an agent and find a home that you like - enough to want to own in the future.

After all, they are not in the rental business.

Quick Explanation Of How The Lease To Own Program Works

Have you ever rented a home or an apartment?

If so, then you know how the Lease to Own program works - mostly.

The two main differences are:

  1. There are terms in the contract that says you have the right to purchase the home in the future
  2. You have a larger choice of homes to choose from

With that said, let’s go through a quick scenario of the process...

Scenario Of Going Through A Lease To Own Programs

You qualify based on your debt-to-income ratio.  Let’s say that you qualify for a $2000 a month lease.  Let’s say this amount equates to a $300,000 purchase price.

Once you tell me what you’re looking for I will search for homes that one only meet your criteria as close as possible, but also qualifies for the lease to own program guidelines


Typically they want homes that are away from power lines, train tracks, airplane pathways, large shopping centers, and not be on a 4 way, busy street.

The property also need to be upgraded, not have galvanized piping and located in a good school district.

These guidelines are a quick guideline.  One lease to own program may accept some of these items and not the other.


Continuing with our scenario …

Once I’ve found homes for us to view we will then go and view the interior of the homes.  While you look around I will be looking through the property and make sure there are no red flags that may make the property not qualify for the lease to own program.

After viewing some homes, if you find one that you like to submit/make an offer on, then I will start the paperwork for the lease to own company to purchase the home for you.

During the offer process, you will be communicating with them and finalizing the lease paperwork which includes how much you need to have in your bank account (typically 2 months rent), what your monthly lease will be for year 1, year 2 and so on.

It will also include what your purchase price will be for year 1, year 2 and so on.

When you see the numbers, you’ll notice that it’s best to try to buy the home in the first year.

Once the offer is accepted, then, depending on which lease to own program you go with, we’ll meet for inspections or not.

This is the time that I do the work behind the scene.  You and I won’t be meeting much, but I will be giving you updates throughout the transaction.

You will be dealing mostly with the lease to own company and finalizing the paperwork.

Once we close, depending on which lease to own program you go with, you can move in right away or wait 15 days after closing so they can get the property ready for you.

It sounds pretty simple, right?

Because it is.

Call me to get started or if you have any questions.  

Ask me about the new innovative way to finance a home with an Own Option Mortgage loan program.



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About the author: All of the articles in this site were written and provided by Rico Castillo (DRE# 01234643) with Coldwell Banker.  If any information is provided by another source, such as the local MLS or by Metrolist, then a disclaimer will be on that page.

Rico can be reached by cell at (916) 934-3146 or email at rico.castillo@cbnorcal.com.   Visit his YouTube Channel at https://bit.ly/3bAaZJs

My aim is always 100% client satisfaction by helping you accomplish your real estate goals and finding you the home you've Dreamed about in the area you and your family can feel proud and safe to live in!