Lease Purchase Benefits and Risks
Weigh Your Options with Confidence
Rent Robin has been structuring Lease Purchase transactions since 2001, responding to the growing demand from buyers who wanted to purchase a home but were not yet able to qualify for traditional financing.
Like many pioneers, we learned through experience—navigating challenges, refining processes, and developing a deep understanding of what works and what does not. Today, we bring that knowledge to our clients and are even happy to teach classes for organizations interested in learning what we’ve discovered through real-world application.
What Is a Lease Purchase?
A Lease Purchase is a legally binding contract between a buyer and seller to sell a property with a delayed closing date.
The purchase agreement is very similar to a traditional real estate contract and addresses every critical detail, including:
Purchase price
Financing terms
Taxes
Termite inspection or bond
Title examination
Warranty deed
Required disclosures
No detail is ignored.
The primary differences from a traditional sale are:
Closing Date: Agreed upon by both parties, typically 24 months
Maintenance: Handled by the tenant-buyer
Possession: Defined through a traditional rental agreement until closing
All lease purchase agreements are prepared by an attorney to ensure clarity, compliance, and protection for all parties.
Benefits of a Lease Purchase
Long-Term Leases
Traditional tenants typically sign 12-month leases. Lease Purchase tenants often need two to three years to improve credit, save for a down payment, or establish employment tenure required by lenders.
Longer leases:
Reduce vacancy-related expenses
Minimize turnover
Benefit both owners and tenants
Even if the tenant does not close, the owner has benefited from long-term occupancy and reduced vacancy costs.
Reduced Maintenance Expenses
In a Lease Purchase agreement, the tenant assumes responsibility for maintenance.
This:
Reduces costs and stress for the owner
Allows the tenant to experience real homeownership responsibilities
Encourages better care of the property
Larger Deposits
A standard tenant typically provides one month’s rent as a refundable security deposit, held in escrow.
Lease Purchase tenants usually deposit two to four times that amount as non-refundable earnest money, which is disbursed at move-in. If the tenant closes, this earnest money is credited toward the purchase price.
Receive Full Market Price
While price is always negotiable, buyers who receive favorable terms—such as extended time to close—tend to negotiate less aggressively on price.
With fewer comparable homes offering flexible terms, buyers focus more on opportunity and timing than price alone.
Lower Closing Costs
Closing costs are negotiable. When sellers offer attractive terms, they are often not required to pay closing costs.
That said, contributing to some closing costs can increase the likelihood of a successful closing—an option we help owners evaluate strategically.
Better Care of the Property
Tenants who expect to become owners generally:
Take better care of the home
Integrate into the neighborhood
Treat the property as their own
Rent Robin still conducts regular inspections to ensure proper care and compliance.
Sell Without a Long Vacancy
One of the largest expenses when selling an investment property is carrying costs during vacancy:
Mortgage payments
Insurance
Taxes
Utilities
Lawn care
Maintenance and security risks
With a Lease Purchase:
Rent is paid up to the day of closing
There is no extended vacancy
Carrying costs are dramatically reduced
Professional Oversight Matters
Lease Purchase transactions offer significant benefits—but they also involve risk. These agreements should only be entered into with clear expectations, professional management, and legal oversight.
At Rent Robin, we structure, manage, and guide Lease Purchase transactions with the goal of protecting your investment and moving all parties toward a successful closing.