A Guide to Lease-Purchase and Owner-Financing

Introduction: A New Path to Selling Your Home

If you’re struggling to sell your home through traditional methods, it’s easy to feel like your options are limited. But what if there was a path to not only sell your property but also achieve your specific financial goals without the usual hassles? For sellers in the right situation, creative solutions can unlock a property’s true potential.

This guide is designed to introduce you to two powerful alternatives: lease purchase and owner financing. We are a nationwide group of investors with over 30 years of experience, and we’ve used these strategies to help countless sellers. Our goal is to break down these options in simple, clear terms, and empower you to determine which of these powerful strategies aligns with your needs. Let’s begin by identifying who stands to benefit the most.

Is This Approach Right for You? Understanding Who Benefits Most

While lease purchase and owner financing are excellent strategies, they are designed for sellers with particular goals and are not a one-size-fits-all solution. These options are most beneficial for two primary types of sellers:

• The Seller Seeking Top Dollar: This is for the homeowner who wants to get the highest possible price for their property, doesn’t need all of their cash immediately, and is willing to wait to receive their full equity while avoiding thousands of dollars in realtor commissions.
• The Seller with Little-to-No Equity: This is for the homeowner who might otherwise have to bring their own money to the closing table just to sell their home. These creative financing structures can help them sell without that financial burden.

It’s important to note that these options are NOT a good fit for a seller who needs all of their cash from the sale immediately to use for another purpose.

Now that you have a better idea of who these options are for, let’s explore the first strategy in detail.

Option 1: The Lease Purchase Explained

2.1. What is a Lease Purchase?

A lease purchase is best understood as a delayed cash sale. You and an investor agree on a purchase price for your home today, with a definitive future date for the final cash-out. Until that date, you retain the title and ownership, while the investor takes over any and all responsibilities for the property—from maintenance to mortgage payments.

2.2. Key Seller Benefits of a Lease Purchase

Entering into a lease purchase agreement offers several distinct advantages for the right seller.

1. Get Your Full Asking Price: This method allows you to achieve top dollar for your home. Because the flexible terms create value for the investor in other ways (such as over time), they can often offer you the full retail price for your home today—a price that cash-only investors who need a steep discount cannot match.
2. A Truly Hands-Off Experience: The investor acts as the “principal” in the transaction, meaning you deal solely with them. This creates a single point of contact and a professional buffer between you and the end buyer. All issues that come up are the investor’s issues, not yours.
3. Save Thousands on Fees: With a lease purchase, you can avoid paying costly realtor commissions. In many arrangements, the investor may even cover your closing costs, allowing you to net more from the sale.

With a clear understanding of the lease purchase, let’s look at the second creative solution.

Option 2: Owner Financing Explained

3.1. What is Owner Financing?

With owner financing, you essentially “act as the bank” for the investor. You and the investor agree on a price, a monthly payment, and a term. The title transfers to the investor, who then makes monthly payments directly to you against the equity you have in the home. You receive consistent monthly payments, secured by a mortgage on the property. As the new owners, the investor covers all taxes, insurance, and maintenance, making it a complete hands-off deal for you. At the end of the term, you receive the final “balloon payment” for the remaining balance.

3.2. Key Seller Benefits of Owner Financing

Offering owner financing provides a unique combination of income and security.

1. Act as the Bank and Earn Income Instead of waiting for a single lump sum, you receive consistent monthly payments, creating a steady income stream from the equity in your property.
2. Ultimate Security You hold a first mortgage on the property. If the investor were ever to default, you would keep all the payments they have made and get the property back with a lower remaining mortgage balance—putting you in an even better financial position.

Now that we’ve defined both options, a direct comparison can help clarify their differences.

Lease Purchase vs. Owner Financing: A Side-by-Side Comparison

This table highlights the fundamental differences between a lease purchase and owner financing to help you see which structure best fits your needs.

Feature Lease Purchase Owner Financing Core Concept A delayed cash sale. You act as the bank for the investor. Title Transfer Title remains with seller until final cash out. Title transfers to investor at closing. Seller’s Collateral You retain full ownership of the property. You hold a first mortgage on the property. How You Get Paid A lump sum on or before a future date. Monthly payments, then a final balloon payment.

Addressing Your Common Questions and Concerns

It’s natural to have questions when considering a non-traditional home sale. This section addresses the most common concerns sellers have, providing clear, straightforward answers.

“What if my home gets damaged or the buyer can’t get financing?”

These are not your concerns. In these arrangements, the investor takes on full responsibility. Your contract is with the investor, who is obligated to cash you out by the agreed-upon date, regardless of any issues with the end buyer. We have been in business for over 30 years with an A rating from the Better Business Bureau because we honor our agreements. Any problem that arises is the investor’s problem to solve, not yours.

“I don’t want to be a landlord. How is this different?”

You are not a landlord in these scenarios. That’s exactly why the investor stays in the middle. Your legal relationship is with a professional investment company. You’re leasing to us, and we guarantee your cash-out. We handle all management, tenant interactions, and maintenance, completely insulating you from any traditional landlord responsibilities.

“Should my attorney review the agreement?”

Of course. We expect that you will want an attorney to review the agreement, and all our closings occur with an attorney. To ensure you get an informed legal opinion, it’s vital to find the right counsel. Many real estate attorneys are only familiar with traditional cash sales and may default to advising against a structure they don’t fully understand to avoid liability.

For an honest and accurate review, follow this process:

• Avoid asking an attorney for a “quick” or “free” look, as this often leads to overly cautious, non-committal advice.
• Seek out an attorney who is actively and currently dealing with lease purchase and owner financing agreements. When you call, ask them directly: “Are you comfortable and experienced reviewing a lease purchase agreement with an investment company?”

This approach will help you find an attorney who can provide an informed opinion based on expertise, not unfamiliarity.

Conclusion: A Flexible Solution for Your Unique Situation

Lease purchase and owner financing are powerful, flexible tools that can help you achieve your goals when traditional selling methods fall short. By allowing you to get your full price, save on fees, and create a truly hands-off selling experience, they offer a clear path forward for sellers in many different situations.

Understanding these options is the first step toward finding the right solution for your property. Armed with this knowledge from a trusted investment group with decades of experience, you are now better equipped to unlock your home’s potential and move on to your next chapter with confidence.