The rent to purchase is a process of leasing a home to buy it at a future date. This option depends on location, price, terms, and time.
In a lease option contract, both seller and the tenant/potential buyer decide on the cost of the purchase option.
Usually, this amount is forfeited if the buyer is unable to purchase the property at the end of the lease. After that, both parties will finalize the purchase price of the property which is decided before the lease option contract is signed.
The next step in the process is to decide on the tenure of the contract. Usually, this period could be anywhere between 1-and 3 years.
Once the tenure is finalized, both parties will then agree upon the amount of rent that the buyer/tenant would be paying every month.
The rent is usually higher than the market rent as an additional portion in the rent payment goes towards the purchase price which covers the down payment for purchasing the property towards the end of the lease option agreement.
For example, if the monthly market rent for the house is $1500 and the seller charges $180, the additional $300 would be adjusted towards the purchase price of the property agreed in the contract.