Casino Connection Nevada

Knowing your lease options

A reasonable opportunity in today’s mortgage crisis

by Joshua Cohen

Remember the days when a bar back making minimum wage could qualify for a stated income loan, telling a bank that he makes $120,000 a year and qualifying to buy a $400,000 home? Well, those pie-in-the-sky loan programs are crashing hard all around us. Foreclosures are at their highest levels since the Great Depression and lenders are clamming up. Even though interest rates are low and housing supply is high, it’s now more difficult to qualify for a loan than any time in recent memory. Lending institutions are restricting loan programs by increasing minimum credit score requirements or minimum down payment amounts. That means it’s getting harder for homebuyers to reach their dream of home ownership.

But for those who want to own and can’t qualify for a fully-documented loan, there is a solution: the lease-option or “rent-to-own” program.

“The rent-to-own program allows someone to purchase a home with the same seller incentives offered to them as to anyone else, while saving up the down payment for the home over time,” says Zolt Szorenyi of Developers Marketing Solutions. “It provides a solution to bridge the gap between a homebuyer and the loan guidelines. With people paying pretty high rent these days the rent-to-own program makes it so your rent is not just money out the door. It puts money towards your down payment to own. It also allows people to repair credit while they are saving up for a down payment.”

Lease-options are an easy and affordable way to get into a home with little down and relaxed qualifications. The seller/landlord agrees to create a long-term lease (usually one to two years) and credit the buyer/tenant with a certain amount of the rent to go toward down payment. It also allows the buyer/tenant to lock in today’s low price, so that if prices do go up again this year, the buyer/tenant gets to purchase at a below-market price with some significant down payment. Also, purchasing is an option of the tenant/buyer, not a requirement.

“Lease-option programs are designed to help people who want to get into a purchase, but don’t want to extend themselves completely,” says Clint Harbers, a residential sales & leasing agent at Sky Las Vegas. Sky is the first high-rise tower in Vegas to offer a developer-backed lease-option program. “Credit requirements are usually more flexible than on a straight purchase.”

Here’s an example of how a lease-option might work: Sally, a cocktail server, has been working in casinos for about a year and has decided that she wants to buy a home and stay in Vegas long-term. She earns about $40,000 per year and, due to some late credit card and medical bill payments, has a credit score of 580. When a mortgage broker tells her she’ll need 20 percent down to purchase anything, she realizes that she doesn’t have enough saved up. The condo she likes is for sale at $200,000, but the homeseller agrees to a two-year lease-option at a monthly rent of $1,400. Sally must pay a one month security deposit plus one month non-refundable option payment. She also has the right to purchase the condo at any time in the next two years for, say, $200,000. The homeseller agrees to credit Sally with a portion of her rent payments (let’s say $400 per month), so on top of her option payment, she will earn $400 per month to go toward her down payment. After two years, she will have saved up $11,000 (as a seller credit) toward the purchase of the home, which makes coming up with the rest of down payment a lot easier. She can also use that period to pay all her bills on time and hopefully get her credit up to 650 or even 700. She then goes back to her mortgage broker, and he’s able to get her qualified to purchase the condo.

There are many ways to structure a lease-option. You and a landlord/seller can agree on a set price or allow the market to determine the price. How much rent is applied to the purchase can also be negotiated. The actual lease-option payment has a great deal of flexibility too. Most lease-options also have a clause that results in the buyer/tenant losing all their earned deposit after the expiration of the lease, so be sure to read the fine print.

While lease-options have traditionally been the domain of individual homeowners, larger developers are now offering the program as well. Eleven11 was one of the first condo communities in the country to offer a lease-option program. They offer affordable condos from the mid-$100s and flexible programs for both purchases and lease-options. Eleven11, located on West Charleston, between Buffalo and Cimarron, offers lease-option periods of up to three years.

“We have decided to implement this program to help buyers reach their dream of homeownership,” says Szorenyi, representing Eleven11. “I think having this option for people is a great way to get them to their ultimate goal which is calling a place home.”

Sky Las Vegas, the only purely residential high-rise on the Strip, instituted a lease-option program when the investment buyer pool dried up. “Our program gives casino employees the chance to check out whether they like high rise living before committing to a purchase,” says Harbers. Sky is very interested in being a place for locals to live, and they are willing to be flexible on their developer-backed program. “If someone is working in the casino industry, we’ll do our best to help them out.”

Along with the location and resort-like amenities, high-rise living also comes with a price tag: individual units at Sky cost between $600,000 and $1,500,000 with lease-option programs ranging from $2,000 per month on up. The nice thing about their rent-to-own program is that they credit 50 percent of all rents paid toward a down payment. That, along with the 5 percent non-refundable deposit, makes it easy to save up a reasonable down payment over time. They also have a straight rental program, so that casino employees can check the building out before committing to a long-term lease-option.


Whatever you decide to do, whether it is purchase, rent or lease-option, be sure to use a real estate agent. Here are some contact numbers for further information:

• Evans Small, Pegasus Realty (assistance with purchase or lease-option): 702-510-4831

• Eleven11 (low-rise condos with lease-option available): 702-405-1111

• Sky Las Vegas (high-rise condos with lease-option available): 702-877-4759


Most landlords have a lot more experience in negotiating lease-options than individual tenants, so be sure to get all the help you can. Here is the best plan of attack:

• Consult a mortgage broker to find out what you can afford, when, and what needs to be done to get you ready. Consultations are free, and they will be happy to help in order to earn your future business.

• Use a real estate agent to help you find and negotiate your lease-option. They will provide free advice and save you a great deal of time and money. In almost every case, the seller/landlord will pay your agent’s commission.

• Negotiate an arrangement that is not only doable, but is affordable enough to leave you with leftover monthly cash to pay down other debt and fix your credit.

• Once in the lease-option, be sure to do everything in your power to get ready for your purchase. This might mean saving all your tips from two shifts per week, skipping a vacation, putting off the purchase of a new car, or even choosing Blu-Ray over a night at the cinema.