First Garry, let`s take a deep breath. The good news here is that the fate of the universe doesn`t depend on whether you and I agree on how to approach a rental option. What I can`t understand from your feedback is whether you`re a pro landlord or a pro tenant. That said, in my experience, there are a number of rents that are reasonable. It is not that there is a reasonable rent, and a penny makes it more or less unreasonable. Given the types of homes we rent, the reasonable range is usually between $100, say $1,100 to $1,200. What we usually do is calculate the top of that range for a one-year term and the low end for a 2- or 3-year term. What for? We learned that the most important expenses are vacancies and turnover. And the rent we charge doesn`t change for a rental option. Well, you may agree or disagree with this approach, but I think it`s fair for both parties, and our tenants agree. Wrong answer, with all due respect, a broker is the least qualified to answer this question. The training an agent receives is usually a paragraph of a very large book (Modern RE Practice 7th ed – Dearborn Publishing).

The reason why renting with property has a bad reputation in traditional real estate circles is that most fail. Our local association advisor, Michael Lafayette, stood up in front of a 3-hour rental course and said in advance that he would rather do a short sale rather than a lease-purchase/option. Brokers have no training on how to qualify, structure and execute a rental option. Most states, including Virginia, do NOT have standard forms. I have spent thousands of dollars (as a KW agent) on education and contract review and continue to train in this niche business model. It`s a model that doesn`t work for everyone, but can be a real win/win if it does. 4 months ago, my family moved into a house where we signed a contract stating that we will rent the house and buy it at an agreed price in 8 years or sooner. The homeowner has a mortgage on it and he pays the mortgage, taxes and home insurance with the money we pay each month until we buy it. The state`s agricultural insurance has just abandoned the owners` policy because our contract is read together as a purchase.

So the owner called around the quotes about the house and way too high, she wants to stay with State Farm and the only way State Farm will insure the house is if she just gives them a lease from us. We were asked to sign a generic lease so she could give it to them. I don`t understand if she`s the mortgage holder, so it shouldn`t matter, the mortgage holder pays for the home insurance correctly? Any advice? Thank you Are there any reasons why a contract buyer can leave the purchase and get a refund of the rental premium? For tenants reading these reviews, I would suggest never accepting a rental option that doesn`t have a reasonable fixed price. There is no value in buying an “option” to buy the house in the future at an always agreed price. There are several reasons why a rental option can be an attractive way to buy a home. First of all, the rental options appeal to those who do not have enough money for a down payment. Through rental credits (see below), a tenant can accumulate money that is due for the deposit. In addition, during the rental period, the tenant can save money that goes beyond the rental credit to put it on the house. In the United States, when loans are applied at a purchase price, the agreement becomes a financing agreement, and these contracts have been identified as predatory loan agreements under the Dodd-Frank Act.

Under this federal law, any financing agreement requires that the buyer of an owner-occupied apartment (one to four units) be eligible for any financing agreement with a registered mortgage lender. According to this federal law, there are exceptions for owners who finance their main residence, those who are in the real estate sector, such as owners, are considered dealers. .