into a lease option agreement for let’s say $100,000, rehabs the property with about $20,000 and now the market value is approximately $135,000 the investor can sell the right to purchase for $35,000 and the new buyer would close with the original seller for $100,000 6.b Another example: A buyer buys the same property and uses his/her own money to rehab and may use rehab money towards the down payment. This allows the buyer to NOT have to come with a large down payment and rehab money. Everything functions like a lease except there is a schedule when the buyer can decide to purchase the property. The terms of the lease have to be negotiated also. These include items typically found in leases: maintenance, utilities, taxes, pets, how many occupants, insurance, ability to make modifications to the property, and so on. One note: Maintenance terms in a lease-option often differ from those in a standard lease. In a typical lease, often the owner is responsible for all repairs, except—sometimes—for a $50-$100 per incident deductible. Basically, the owner is responsible for virtually all repairs. In a lease-option, often a greater burden for repairs is shifted to the tenant-buyer. During the term of the lease option, the tenant makes lease payments to the landlord for the use of the property with the terms mutually agreed. At the end of the contract, the tenant has the option to purchase the property outright. The tenant does so by going out and getting a mortgage. Excess credit may also be applied towards the eventual purchase of the property, or towards the down payment for a mortgage (CAUTION, the buyer and seller can agree to whatever they want, but when the buyer goes to get permanent financing the bank has guidelines to what can be applied towards the down payment or the purchase. Typically banks only allow an amount that is above and beyond market rent to be considered for a down payment.) In that case, the lease-option works as an automatic savings plan for the tenant. This down payment is applied as part of the "option consideration fee"; in the arena of lease option purchasing this is a fee charged for the right to purchase the property. Reasons for using a lease option Buyers Buyer is relocating and may need to sell a property in another area before the buyer can qualify to purchase the