What is the Lease-to-own or Rent-to-own arrangement?
The lease-to-own (rent-to-own) investing model cam be advantageous when real estate market slows down or when the seller/investor is looking for a predictable return. LTO(RTO) model is also favourable for a buyer who cannot afford a full down payment and/or has a bruised credit history.
In this arrangement, the buyer and seller enter into two agreements: a lease contract and the contract with the option of purchase the property at agreed price and time period. The tenant/buyer is usually required to provide a deposit upfront and have monthly payments with a portion that is adjusted versus the purchase price. Usually, if the tenant decides to cancel the contract, the initial deposit is left behind.