Category Archives for "Lease Options"

Real Estate Beginners Can Profit From Lease Options Strategies

For beginners with little or no cash, this could be a very good strategy indeed. The Lease Option Strategy has two components. Under the law, an option is a way for a real estate investor or buyer to enjoy the right — but not necessarily the obligation — to buy a specific parcel of real estate in a given market. The option component allows you as an investor to control investment real estate and to position yourself for later profit without necessarily having an obligation to buy. You might then lease the property (retaining the option to buy it later for yourself if you choose to do so), and turn the property into a cash-flow cow. In negotiating the original transaction with the owner, you would agree to a specific purchase price. That way, your price is locked in even if the market value goes up significantly.

CREATE A PROFIT GOING IN

With the property now under your control, if you ‘do the math’ and the numbers make sense, you can go ahead with the purchase from the previous owner if there’s an opportunity to make a profit when you later sell. Let’s say you acquire a certain property on a Lease Option basis. Assume for discussion you agreed on a RM500 per month rent and a RM100,000 purchase price with the owner. You might then sub-lease the property out to a tenant for RM650 per month and by monitoring the local market you might decide to buy the property at $100,000 as agreed. You then offer your tenant a Lease Option at an even higher purchase price of RM125,000, perhaps with lease payments (or a portion of them) being applied to the down payment. Under that arrangement, your tenant will be better motivated to take care of the property (since they might one day be the owner). At the same time, you would be in a better negotiating position on the selling price. Your tenant could have the lease payments (or a portion of them) applied to the down payment. Under such an arrangement, you might negotiate a better selling price than otherwise, and enjoy a win-win transaction.

FISHING THE WATERS

The Lease Option Strategy is one of many real estate investment techniques. It works well in soft markets, where there are more properties for sale than there are buyers. Where you find a property owner with a low equity-to-debt ratio, and they need to rid themselves of the property, you might find the owner willing to do a Lease Option. It also works well where the local market is experiencing a high number of foreclosures. The ‘teaser rates’ that many lenders offered a few years ago are creating thousands of foreclosures around the country as the adjustable rates get increased. You might profit by using the Lease Options strategy in your favor in those real estate markets. Look for Lease Option opportunities in single-family homes as well as duplex and apartment buildings. With a property tied up in a Lease Option, this gives you time to arrange suitable financing or to find your own arrangement in which you buy the property whenever your tenant is ready to buy.

Source: Ezinearticles

Lease Option – The New Road to Home Ownership

For many a beautiful family, a large yard in a good neighborhood and home ownership are still part of the American Dream. It’s time for this to stop being a dream and become reality. With lending institutions tightening their lending requirements it all but seems impossible for the dream of many to become reality. But there are choices, options and other avenues for a person to pursue. That option being Lease Optioning a home.

What is Lease Option? A lease option provides a way for many people to become home owners in today’s market. A lease option allows a person to obtain their piece of the American Dream without having to qualify for traditional lending up front.

Here’s how it works. You find a real estate investor with a home to sell that fits your needs and criteria. Once you have viewed the property and agreed to terms on the home you would then pay an option fee. This option fee is paid because you are asking the seller to take his/her home off the market to sell so that you may lease the property until you can get enough money for a down payment or work out whatever credit issues you may have prior to purchasing. Your lease term is agreed upon by you and the seller. The other terms should be established at this time such as monthly lease payments, purchase price, extensions, penalties and any other issues you or the seller may have.

There are some Pros and Cons to purchasing a home on lease option terms, let’s review them. Pros:

1. You can enjoy the pride of home ownership right away

2. You lock in your purchase price today even if the home is worth more when your lease term is up and you must purchase.

3. You gain property appreciation which equals equity

4. It’s easier than dealing with banks

5. If you have credit issues that prevent you from getting traditional financing this gives you time to work out those issues (a good seller should be able to assist in this area)

6. Your option fee and any rent credit can go towards your down payment reducing the out of pocket expenses you will have when getting traditional financing

Cons:

1. If for any reason you decide not to or you can’t purchase the home when the lease term is up then you would forfeit your option fee payment.

2. You discover that the property has major defects that were hidden

When looking to purchase a home in this manner we suggest knowing who you are doing business with, getting a home inspection, and understanding all the terms of the transaction.

Source : Ezinearticles

Why Leasing Makes Sense in Today’s Real Estate Market

Due to the severe downturn in the economy, many sellers are finding themselves ‘underwater’ in their homes. This means that they owe more money than the house is currently worth. This makes sellers desperate, and they will often make foolish mistakes in how they try to sell the house. That is where options that they haven’t thought of before come in. Most people don’t realize there is more than just the traditional one way to sell a house. A home can also be leased with an option to buy.

The lease with option is not new to the market, but it is has not been common in recent years. In the last decade, the housing market boomed and people who had previously been ineligible for a loan found themselves with multiple offers being thrown at them. Why lease when you could buy?

But now many of those new homeowners are underwater and need help, and that is where a lease option comes in. This is a traditional lease for a property (this could be residential or commercial) with an option to buy.

The other is a lease purchase, which is a traditional lease term that is also a purchase. Sound confusing? It really isn’t. A lease purchase is a lease that will become a purchase once any missing criteria are met. For example, a person may need to tidy up their credit before they can officially be given a bank loan for a purchase. They are given a lease while their agent helps them get the necessary credit rating to qualify for the loan. At that time, the lease then becomes a purchase.

The lease option or lease purchase works for both parties because it enables the desperate seller to recoup their monthly mortgage payments while still finding another home. It works for the buyer because there is no money down, and any appreciation in the property is to their advantage. If the market begins to recover as you lease, that value is added to the home should you want to sell it later, after purchase. It should go without saying that there is a lot to be gained by going this route, and almost all of the gain is for you, the investor.

Source: Ezinearticles

Becoming a Millionaire

Many websites explain different ways to become a millionaire in short spans of time. The most necessary tip to becoming a millionaire is thru saving a part of salaried income or profit from your business regularly.

Setup a business that offers huge profits with less spending and less staff. you need to identify through market research or web research a product that’s in great demand. find out the ways that to produce or market that product. You need to mobilize resources to run a business. A number of the businesses need giant chunks of cash. You’ll need to seek the help of banks or other money institutions to get loans at reduced rates. Talk over hard to get loans at cheaper interest rates. Realize how fast you’ll setup a business and market the product. Before entering the business, make a plan and attempt to attain it. it’d help to turning into a millionaire through reaping large rewards.

Go through newspapers and find that products are being sold in your local market. Determine the demand for such product. attempt to supply such products from different places at lower costs and sell them a little lower than the prevailing costs in the native market. remember advertising is that the key to success of any business. Have a positive attitude to achieve the goal. cCan surely accomplish the goal of becoming a wealthy person if you have a will and needed skill to do the business.

Some folks used to become made through buying of lottery tickets. Becoming a millionaire through purchase of lottery tickets is very rare, thus don’t depend entirely on this.

You do not got to work too hard when you dream of becoming a millionaire. Start saving some of your cash regularly. Several savings schemes, like life insurance Policies, Mutual Funds and fixed Deposits are available to invest part of your attained cash. Smart investment causes you to made. You’ll purchase immoveable properties using your savings and sell them once the rates of such properties increase. Investing in real estate in a number of the nice locations would offer you large dividends within the long. The key purpose to saving is to cut back unwanted spending. go for cheaper options wherever viable.
Keeping these things in mind can help you in getting closer to your dream of becoming a millionaire.

Source: ezinearticles

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The Questions that The Lease Option Sellers Will Ask

When working with a potential lease option seller, they sure will have questions to ask before they agree to a rent to own arrangement for their house. It is your job as the informed real estate investor, and the person connecting the buyers with the sellers, to solve those questions and allay any fears that they have.

Below are the questions that you’ll be faced with, and the answers you should provide to put any doubts to rest so you can move on to finding the right buyer :

1. What if major damage occurs to the house?

– The mindset of a buyer is an ownership mindset, not a renter mindset; they will not want to damage the property because they are working towards ownership.
– The buyer may actually improve the property.
– Why would someone earning credits towards purchase purposely damage their home?
– They will make a substantial down payment, which they would lose, should damage occur.
– As a homeowner, you will have hazard insurance to cover any eventualities.

2. Midnight move out

– Buyer tenants will move out with notice.
– If no notice is given, you just resell it and you keep the option deposit.

3. What about money collection – rent and monthly rent payments

– An escrow company can collect (for a fee of around $50/mo.). I use Avalon Escrow Company to handle all payments and transactions.
– Title company can collect the money.

Things You Must Know Before Buying an Investment Property

Investing in real estate can help you get great returns; it is known for returning both capital appreciation and cash flow. Some examples of real estate investment properties include apartment buildings, bungalows, flats, single homes commercial or industrial properties etc. Often, these properties are categorized as illiquid, which means you can sell them hastily. As an investor, you must be aware of certain facts before putting your hard-earned money into real estate property. This article will be educating you about such facts.

As an individual looking to invest in real estate, you must have clear idea about the amount of money, energy and time you are ready to expend for the same. In other words, you must know how much you want to commit or have the ability to commit when making this kind of investment. You must be aware of the fact that for making profit, you will have to put in a lot of time and effort; you will need research several properties and markets thoroughly before taking any investment decision. If you are not confident about your ability to research, you should always seek assistance from a professional; an experienced real estate agent can help you in completing the research effectively and quickly. Remember conducting research is extremely important as not doing it can make you lose all your money.

As mentioned above, for achieving success as an investor, you must perform thorough research both on individual properties and market characteristics. To do that, you must have some questions ready; once you find answers to all these questions, your research is complete. Find out whether the costs of the type of property you are looking to invest in are falling or rising. Find out whether there are plenty of options available for you to choose from when making an investment. Find out whether the rent of your preferred properties are falling or rising. Gather information about the economic status of the area, in which you are thinking of buying a property. Finally, find out whether the land, home or building you are looking to buy will allow you to achieve your goals of cash flow and capital appreciation.

It has been found that the majority of the successful investors rely a lot on their instincts. However, intuition is definitely not the only thing they believe in when taking a decision in these matters. These people also run numbers for making sure that the money they are looking to invest will bring them good returns. You should decide based on the combination of both, instincts and numbers.

Source : Ezinearticles

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5 Habits of a Successful Property Investor

Many people want to be financially free. I hear people say this all the time. But I always ask them these queries. So what are you doing about it? Have you ever got a plan on how you’re going to get there? When is your target date? How much are you aiming to build and what do you need to do reach that goal? they need simply no idea. So, it’ll just be a dream.

Similarly, the road to a successful journey in property investment is never easy. Whoever said that creating your millions in property is easy? If yes, then everybody you meet may be a property have. You’ll meet negative colleagues, relatives, friends, spouse or kids who can discourage you. But believe your dreams and goals that you have set up for yourself and you’ll be able to make that dream a reality. Cultivate these habits below if you want to be a successful property investor:-

1.Have Goals And Set Datelines

Setting realistic goals and datelines is crucial for any type of business as it guides your focus and action towards attaining the targets that you’ve set. Review the goals periodically to see wherever you’re towards attaining them and revise them wherever necessary.

2.Invest In Yourself

-Read lots of Property Books, Magazines And Articles
-Listen To Audios On Property Investments
-Attend Property Seminars And Exhibitions

Invest in educating yourself with the right knowledge to minimize the mistakes in property investments. I usually hear people say, the seminar courses are too costly, but yet they’ll afford to buy a replacement car, a new theatre set, choose a holiday or buy some lifestyle product that will be a liability rather than investment in educating themselves to achieve their dreams.

3.Take Immediate Action

Successful property investors are Action Takers! They make things happen. once they have gained the proper information about property investments from attending property seminars, reading property investment books and planning to know other successful property investors, they take immediate action to analysis for the properties they will invest in.

4.Willing to make Sacrifices to view Properties

Go and view as many properties as possible in the areas that you want to target. Jot down your observations in your notebook and compare them before you zoom all the way down to some of potential ones. Take a drive to look at the properties throughout different times of the day to note any important observations in the vicinity or surrounding areas close to your targeted property. For example, I noticed that the road resulting in a specific condominium within the evenings is full with automotive pose on the proper and left of the road due to shortage of car parks making the route tough to drive through that was fine once I went during the afternoon.

5.Invest With A Calculator, Not with your Heart

Don’t let your emotions affect your call once buying a property. Instead, use a calculator to work out the potential returns and gains based on the property costs offered by the vendor or developer. Calculate the price per square foot/meter of your targeted property and compare it with other properties of similar varieties within the same location (ideally). verify the numbers to see if you’re getting a decent deal from the property before investing.

Source: ezinearticles

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Become A Property Millionaire And Invest In The Right Property

When you hear the term “property millionaire,” you probably think of real estate, but it’s presumably not the type of real estate online professionals know about. Online real estate is totally different than traditional because it values the web itself and therefore the domain names and niches that generate ad revenue and consumer business on a daily basis. It pays to be an internet property millionaire because with the web you have something that can generate earnings every minute of the day or night. Even when you are not “working,” you’ll be earning because of the 24/7 around the clock nature of net itself. however so as to become a property rich person, you need to know wherever to find the best property on the world Wide web to invest in.

One of the most important niche markets that you simply will invest in is actual real estate. More and a lot of homeowners are using the online to search out their dream homes or fixer-uppers that may generate further revenue. Realtors and other housing professionals value internet property that may allow them to get their message out and find new buyers. Branding is everything within the real estate market, and if you know the way to supply domain names and get websites low while selling high, then you’ll earn cash merely from domain sales. If you would like to reap the site with valuable info and details relevant to it market, then you’ll secure ad revenue from housing professionals.

There are multiple ways to earn income online and become a property millionaire, but you do need to be able to notice which markets are in demand and which aren’t. The best way to do this is to form use of the foremost search engines and their free keyword tools that enable you to see however typically a term has been searched within the last week, month, or year. You ought to also run a few test searches on sites like Yahoo, Bing, and Google to test the viability of your class and see what the popular sites in that niche ar already doing right.

So whether you would like to be a property millionaire in the real estate world or a property millionaire within the on-line world, there are numerous ways during which you’ll turn your effort into profit. Knowing where to seem and what to seem for can take you most of the way and exertions and the want to invariably be learning a lot of concerning however the internet works will assist you do the remainder. Developing a business arrange, doing the necessary research, and committing to carrying out your goals may seem a trifle like old-fashioned advice for the digital age, however they’re still tried and true.

Source: ezinearticles

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Tips From Realtors for First-Time Homebuyers

Being a first-time home buyer can be challenging to say the least, but realtors help demystify the process and help make sure you get the house that best fits your needs.

Determine Your Long-Term Goals

The first thing that most realtors would recommend you do is to determine your long-term goals and how owning a home will fit into those plans. You may be tired of spending your earnings on rent and would rather put your money toward something that could actually turn a profit down the road. Or, you may simply want to be your own landlord for a change. Whatever your goals may be, get a clear idea of them before you start shopping around.

Finding the Home You Want

Once you have committed yourself to becoming a homeowner, you can expect the process to be a bit chaotic. More than likely, you’ll make a lot of offers and get a great many counter-offers in return. But don’t be intimidated or allow yourself to get frustrated. A professional can walk you through each and every step so that you’re not overwhelmed.

Financing

You will more than likely have a wide range of financing options, even if you don’t have the best credit. You may be able to find a loan backed by the federal government or get financing that doesn’t require the standard 20 percent down payment. In addition, the state you live in may provide special incentives for first-time buyers. Realtors can provide you with easy-to-understand information on all your options so you can feel confident while shopping around.

Making the Offer

Once you have honed in on the house that meets your needs, your real estate agent can help you decide how much you should offer, as well as any conditions you should request before signing on the bottom line. For example, you could ask the seller to pay your closing costs. Your agent will then take your offer to the seller’s agent, who will then either accept your terms or reject them and make a counter-offer. This back-and-forth will continue until you reach a deal or decide to move on to another option.

When you reach an agreement with a seller, you may be asked to put down a good-faith deposit. The transaction will then move into escrow, which is a period of time (about 30 days, typically) that the seller takes the house off the market. He or she will do so with the expectation that you will buy the home – provided that an inspection does not uncover any serious problems.

Realtors can help you find homes in the neighborhoods you prefer at prices that fit your budget. Once you’ve made your decision, they can help you through the entire purchasing process, from making an offer to getting a loan and wading through the seemingly never-ending paperwork. Realtors can provide invaluable assistance through a trying time.

Source : Ezinearticles

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8 Most Important Aspects of Lease Options

A a lot of creative strategy is for an investor to do a lease option contract with the seller of the property and re-lease option it to a perspective buyer at higher terms than he’s paying. This can be cited as a “butterfly lease option” and can be very profitable if all goes as planned since the investor will have very little or no money or risk in the deal.

With all that said, what is so dangerous about lease options?

1. If you are giving a tenant a lease option, it is critical to sign two separate documents, a lease and an option agreement. The reason is that if you have to evict the tenant, the eviction process stands on its own contract and is not clouded by the option contract part.

2. The option consideration is non-refundable and must not be construed as a refundable lease deposit. Unfortunately, courts have had this confusion problem when there is one document (lease-option) versus two documents, lease plus separate option contract).

3. If you are considering a butterfly lease option, make certain the seller uses a single agreement contract, while you must give your tenant two separate contracts. This is protects you on both sides of the transaction if something goes wrong.

4. Make certain that the tenant understands and signs to the effect that all repairs less than some amount ($3,000) are his since he will be becoming the owner and no longer a renter. If you don’t make this threshold high enough, he will be a typical tenant calling you in the middle of the night with his latest plumbing problem.

5. Do not make the terms of the cure period unreasonable for the tenant. For example, if the tenant is one day late, his option contract is zero and void and his option consideration is forfeited. States have passed laws just to control this type of malicious behavior by the landlord.

6. A common problem is that investors charge too low a rent and when the tenant is ready to finance his purchase he realizes that his new rent will be double what he is paying. His pride of ownership becomes a lack of interest and he does not buy the property. Some investors like this because they can re-lease option the property over and over again constantly collecting non-refundable option considerations. The tenant’s rent should be equivalent to what his mortgage payment including principal, interest, taxes and insurance will be when he buys the property.

7. To support a higher lease payment to get the tenant ready to exercise, give him a monthly credit that will be deducted from the principal purchase price or as a seller credit at the closing. If he is evicted or does not exercise his option, his credit is forfeited.

8. The renewal terms of the option contract may not be the same as the tenant’s lease. The renewal of a lease doesn’t cost the tenant another lease deposit, while the tenant should have to pay a non-refundable renewal fee of $1,000 to $2,000 which will be a credit at the closing, if there is a closing. The other possibility is to have the strike price of the option raised each year. Investors should give their tenant a maximum of two years and 3 months to exercise, while they should ask the seller for a minimum of five years and 6 months.

Source : ezinearticles

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