Glossary

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Lease Option
A lease option gives a tenant the right to purchase the property at the end of the lease. The purchase price is generally negotiated before the lease is signed. A purchase window is also negotiated before the lease is signed. If the option to buy is not exercised, the current owner may be free to lease the property to someone else. The next tenant may then be granted the same option to purchase the property after leasing it. Leasing before buying gives the tenant a couple of advantages. First, the tenant has time to live in the property before deciding to buy. Secondly, the tenant can save up money to qualify for a loan to purchase the property. The landlord also has an advantage as he can still make an income from the property before ultimately selling it. It could help him secure a new loan for his next property.