subject: Real Estate Investing with Lease Options: A Path to Riches [print this page] An overview An overview
While the real estate market may have experienced a downturn, real estate investors still have viable avenues for ensuring monthly cash flow. These are Lease Options which have proven to be one of the most prominent real estate investing tactics in this day and age. An option grants the buyer the right to purchase the property he is currently leasing from someone. However, a lease option does not constitute an obligation to purchase. Motivated sellers who are not willing to wait for traditional sales processes to conclude can easily use this method for their benefit. These options also make a great way for would-be-buyers to buy a home. At the same time investors get premium cash flow.
Lease Options can be helpful for:
Sellers or owners want to get rid of property without enough equity to sell Sellers/Owners can make use of Lease options for ridding themselves of property even if they don't have enough equity to go through the process of selling it off. A seller would have to produce cash to pay for a real estate agent's commission if his property mortgages measure up to 95% or more of that property's market value.
Buyers with flawed credit who need more timePeople whose credit is flawed and who need time to come up with a down payment can greatly benefit from the option.
People who want to try out the house or the neighborhoodPeople who don't want to make an immediate decision on purchasing a given property can try it out first. If they like the place they may think of buying it. If they don't, they can simply move on.
Buyers who want to avoid costs associated with conventional purchasesBuyers enjoy tax benefits with Lease Options because they don't have to deal with associated closing costs and realtor commissions.
Owners of property who don't want to pay for maintenance costsThe options to purchasegrant owners freedom from taking out the wallet for maintenance costs since this burden is borne by tenants who have vested interest in the property and, therefore are encouraged to pay for regular maintenance. In addition to paying the monthly rent, they will also pay for any improvements they want to see in the property.
People who want to sell off their property for top dollarBy using the option, owners can sell off their property at high prices. The investor is automatically entitled to more profit for taking the risk of selling his property to someone with a low credit rating. The property is usually priced at 10% to 15% higher than its market value. The same goes for monthly rents which can be 10% to 15% higher than normal rates. In addition, there is a non-refundable down payment that goes to the owner if the buyer does not satisfy the conditions needed for the purchase of the property. If he does, the amount goes towards the purchase.
In today's market, buyers can easily negotiate the terms of the Lease Option for their advantage. These options make for a win-win situation for both parties involved.
Real Estate Investing with Lease Options: A Path to Riches
