Posted by JoeB(Atlanta) on February 04, 2000 at 21:34:48:
Hi Rebecca, rent credit on a Lease Option simply means that part of the tenant-buyer’s monthly rent/lease payment is a credit towards her eventual Purchase Price, when she executes her option.
Example: you tell the T-B that Lease Option is $100,000 purchase price, $850/mo with $4000 down as option fee, but if T-B can afford to pay an extra $100/mo (making her lease pmt $950/mo) then you’ll give her a rent credit of that extra $100/mo.
This means that if she purchases after 12 months her purchase price will have been reduced by $100/mo x 12 months = $1200 for a final purchase price of $98,800.
Some investors get fancier and give a $2 rent credit for every $1 extra the T-B pays them above their ‘normal’ lease pmt.
Hope this helps,