Some creative ideas on cash are to try to get the Realtor paid a commission on the Lease and then again upon the Purchase/Sale, upon exercise of the Option. Don’t forget about negotiation on all levels. Barter used to be common in real estate transactions in the old days… Maybe something you don’t need they might want. (Note - they may need to get their Broker-owners approval, but usually they will conceed on the hope of the commission on exercise of the option (even if its two years down the road!))

If you are on the Owner’s side of the transaction the risk is typical of rentals, they could trash your place, or not exercise upon the option. But the theory is that the tenant/buyer will take better care of the property because they want to buy it. There is also some risk of the Lease/Option could be construed as an equitable mortgage by a judge and require a judicial foreclosure as opposed to the traditional eviction. So my last law class teacher doesn’t like these, another lawyer’s stuff I have seen does… Go figure thats American law, subject to interpretation…

From the Tenant/Buyer perspective, if you can pull it off, it is a great way to get into a home. It may cost you a bit higher rent and larger deposit, but if you comply with the terms, if may enable you to improve your credit (track your timely payments on the lease to use as proof of ability and credit) to help enable you to qualify, when you apply to finance the purchase at exercise of option). Plus if the market goes down, your not obligated to purchase, you do usually lose some extra “option money” (should be separate from security deposit) and may of paid a slightly higher rent, but only if you don’t buy it. If you like the home and want to buy it, and especially if the Market goes up and you get to purchase at a lower price than what the home is worth then, you get instant equity (also helps you qualify for the loan). If the market goes down, your not stuck upside down!