OfflineLease option is an excellent way to control and eventually purchase a property without the significant cash investment in a down payment. A lease option is essentially two different types of contracts combined into a single agreement. You have a lease (rental agreement). Which has all of the usual terms, but the tenant also has the unilateral rights to buy the property under certain terms and conditions in the future.
A lease option obligates the owner to sell the property but doesn’t obligate the tenant to buy. This is a unilateral contract until the tenant exercises the options and a bilateral contract is created. One of the key issues with lease options is the options is the option price (purchase price) THAT THE BUYER MUST PAY. This future projected value based on anticipated appreciation with set time limits may be offered as a lease option with an option price on $210,000 that can be exercised anytime in the next 12 months in a market where the seller expects appreciation of 5 percent per year. Of course, a savvy buyer doesn’t exercise the option if the option price exceeds the market value of the property.
Lease options are much easier to find, and much more favorable deals can be made, when there are limited buyers, and sellers and anxious to sell. Lease option is most commonly used with single-family homes and condos, but the concept can be used with any type of property. Overall, in virtually all areas of the country, the demand for lease options is greater than the supply.
Remember that lease options aren’t just a great way for real estate investors to buy property they’re also an opportunity for many first-time home buyers to ease into home owning. They’re often in high demand relative to their supply, so lease options are rarely advertised; you may even need to run your own ad seeking lease options. Another way to track down a possible lease option is to respond to ads for “house for rent.” When you own a property that you want to use a lease option to sell, a small ad often brings a large response.
I was reading one of the post on lease option and the gentlemen mentioned how you make money in three ways.I understand you will make money on the monthly rent that comes in and then make money at the end when property is sold to the rent to own buyer.Please correct me if I'm wrong on those two ways. Now the one I don't understand is how do you make money at the front? If anyone doesn’t mind can you explain that one to me please.
Thank you
Can't score if you don't shoot the puck !
The third way to profit is with the down payment on the property. example I buy a property for $1000 down and $550 a month for 18 months with a Price of $120,000.
Then I find another buyer for $2000 down and $700 a month for 12months and a Price of $130,000.
I then Make money Three ways first a larger downpayment, second larger payment monthly and thirdly a higher sale price.
I hope this helps.
Brian
We purchase and resell Homes. We also buy mortgage notes. We also take some debt takeovers.
I just drafted a lease option for my sister's house. We advertised her house for rent; her tenants don't have good credit, so they asked if she would sell the house to them instead of just renting it to them. She doesn't want to keep the house long-term, nor does she want to have to maintain it.
With the lease option, tenants are now responsible for the maintenance of the house, and they are happy to do it, because in their mind, it is their home, not just a rental.
A win-win situation.
Learning and progressing every day,
Valerie
Valerie
“And will you succeed? Yes indeed, yes indeed! Ninety-eight and three-quarters percent guaranteed!” ― Dr. Seuss
"I believe in angels, the kind that heaven sends; I am surrounded by angels, but I call them friends" - Unknown
My journal: http://www.deangraziosi.com/real-estate-forums/investing-journals/59110/...
Thanks for the help everyone !
Can't score if you don't shoot the puck !
Lease Options are hot in this market, and beleive they will become more common in the future.
""Allways thinking outside the box""
www.beaver-creek-realty.com
A Lease Option is a strategy that is to benefit the seller, the buyer, and the investor.
Just make sure that the lease allows certain contingencies for the buyer; for example, if a buyer has bad credit, you cannot expect him/her to be able to get a loan from a bank within one year; you may want to refer him/her to a credit repair consultant, and make sure you keep all this documented, because if the buyer ends up not being able to fulfill his/her obligation to purchase the property, and you evict them and keep their deposit and all monies collected that were to be used towards the purchase, he/she will probably take the investor to court, and judges will try to protect the buyer and frown upon the investor.
A tip that I learned from the Insider's Edge workshop was to offer some money to the buyer to relocate (if he/she was not able to purchase for whatever reason); this would make him/her feel 'not cheated' and would be less likely to resent the investor.
Learning and proegressing every day,
Valerie
Valerie
“And will you succeed? Yes indeed, yes indeed! Ninety-eight and three-quarters percent guaranteed!” ― Dr. Seuss
"I believe in angels, the kind that heaven sends; I am surrounded by angels, but I call them friends" - Unknown
My journal: http://www.deangraziosi.com/real-estate-forums/investing-journals/59110/...