subject: The Lease Option Explained [print this page] The Lease Option Explained The Lease Option Explained
If you have an property to use for an investment vehicle, should you rent it out or just sell it? The quickest answer would be BOTH! Have time on your hands and handy with tools? You could rent it out. The thing to consider is though, if you have several properties for rent, the maintenance aspect could take up a lot if not all of your time. You could hire out the work, but that eats into your profits. Also, locating good tenants is a challenge in itself. Tenants that choose to rent usually do it for a reason. They are usually having credit problems. In addition, most tenants do not take good care of your properties like they would their own homes. If things go bad, they can mess up your house before they move out. Now, if you really want the best answer, your goal should be to find good tenants to rent your property, transfer the maintenance responsibility to them, and create incentives for them to eventually buy your property. With this you would want to include an option to purchase which will eliminate most of the headaches associated with maintenance and dealing with bad tenants. There are several other benefits to the lease and purchase option.
With a lease purchase or lease option as I call them, the rent is usually higher because you are including an option to purchase, this can eliminate most tenants only wanting to rent. People looking for the lease and purchase option are those usually in the process of rebuilding their credit (we excel at this..read the bio below), or are saving money for their down payment. In most typical cases and to be fair, the duration of the contract is normally between 2 to 3 years, long enough for your tenants to rebuild their credit. With our unique system though, the lease option process normally can have the tenant buyer cashed out in a few short months!
This contract also transfers the maintenance responsibility to the tenants. No maintenance worries allows you to concentrate on growing your investing business. Giving your tenants the option to purchase your property create an incentive for them to take better care of your property.
While the client is doing a lease option with you, you cannot sell the house to anyone else other than your tenants. However, you charge your tenants a fee (usually 1 to 2 percent of the purchase price) for the option to lock in the price of your property. If your tenants do not purchase the property before the purchase option contract expires, you get to keep the option fee. However, if your tenants utilize the option to purchase anytime during the contract, you must return to option fee to your tenants.
The important points about a lease option are that you are looking for good tenants to rent your property, create a constant cash flow from the rent, transferring the maintenance responsibility to your tenants, which frees up lots of your time, and eventually sale the property. Although with our method, it is to get the best equity spread possible and get out with your profits in record time.The deal should be fair enough that both parties come out feeling like winners. This is important if you want to be in this business for a long time.
