Category Archives for "Rent to Buy"

Types of Commercial Real Estate Leases

Types of Commercial Real Estate Leases

Commercial real estate leases can vary significantly depending on the type of space and location. A business that leases space in the downtown area of a major city will have a completely different lease structure than a business that leases space in a suburban shopping center.

The following examples highlight some of the more common commercial lease structures:

o Gross lease: In this type of lease a tenant will pay a fixed amount for rent while the landlord is responsible for paying taxes, insurance and other associated expenses.

o Net lease: The tenant covers the base rent and a percentage of maintenance, insurance, and other operating fees.

o Triple-net lease: Typically written for a freestanding facility, the tenant pays all fees and expenses associated with the space.

o Shopping center lease: The tenant pays a base rate in conjunction with the square footage of the retail facility. Typically, the tenant will also pay some common charges and frequently a certain percentage of the gross sales. The tenant may also be assessed part of the property taxes. A shopping mall lease will often include terms about signage, hours of operations, common areas and deliveries. The landlord may also have the right to relocate the tenant.

o Land or ground lease: The tenant leases the ground itself and usually builds on the property. In the majority of land/ground leases, all improvements to the property including development of infrastructure and facility construction will revert back to the landowner when the lease ends.

Keep in mind that there are a number of variations on these types of leases. One example is if a company wants to lease office and warehouse space within the same facility. They might sign a universal lease that stipulates separate rent and lease options for both spaces.

Source: Ezinearticles

A Guide To Successfully Buying Property

Buying a property, whether it is your first or fiftieth time, is a stressful process. For most people, buying real estate represents the biggest financial decision of their lives. Because there can be so much riding on this one purchase, it is imperative that you do the correct research and follow the correct procedures – a failure to do this can mean financial disaster.

Below is a brief guide to buying residential property. Consider this guide a starting point for your own research into buying property – information is your best friend in the real estate game!

Research

Research forms a solid base for any major purchase and the good news is, that you are doing some right now by reading this article! There is a variety of information you need to gather about your desired property and the local area before you commit to buying.

The first thing you need to do is look at the historical sales results for the suburb you wish to buy in. It is very likely that in the last few years a house very similar to the one you wish to purchase has been bought, or sold, in the local area. By comparing the historical prices paid to the current asking price, you can start to build a picture of the local market and decide if you are getting a good deal.

The next thing you need to seriously research, is the properties boundaries and any limitations on the use of the land it sits on. As people rebuild fences and conduct home improvements, the official boundaries can often be compromised. It is important that you are aware of the exact boundaries of the property you are purchasing – you can’t just rely on what your eyes tell you! In addition to this, local councils often place provisions on the use of residential land, such as specifying drainage areas and wildlife corridors. You can contact the council responsible for the suburb you wish to buy in to find out more about any land use limitations.

Inspections

Once you have done your research on the local real estate market and selected a property that you feel is a good deal, you need to start scheduling more in depth inspections. For this, you should hire a qualified building inspector. They will go over the property with a fine tooth comb, finding any major or minor faults, which may compromise the structural integrity of the house now, or in the future. If a house has faults, this doesn’t necessarily mean you shouldn’t buy it. However, you need to consider how much repairs will cost when deciding how much you will offer for the property.

Financing

Before you even start looking, you should have finance arranged. By knowing how much you have to spend, you will be able to focus your search on properties that you know are in your price range. Without positive confirmation of finance, you could just be wasting your own and everyone else’s time by looking at properties to buy.

Source : Ezinearticles

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Basics of Lease Option Investing

Lease Option is the abbreviated form of the appropriate term “Lease with the Option to Purchase. In a Lease Option, a buyer make and sign an agreement with a seller as a tenant and the owner in this case would be the lessor.

The tenant can take an option to purchase the property at a later date while leasing the property during the current time. When the option term is up, the tenant is NOT obligated or NOT allow to purchase the property , but the lessor cannot sell or rent the property to other people else other than the tenant because it is under the lease option agreement.

In order to to have a valid option, the buyer must provide some value things in order to make the option valid. Then in the option agreement, the 2 parties must agree on the price and the terms of the option when the option needs to be performed. So what that means is the buyer and seller should either come up with a purchase price before signing the agreement.

Some basic steps that how a lease option works :

1. A active seller calls you when he is willing to do a lease option on his or her property.
2. You provide an option and agree on the terms for a purchase price.
3. You take out an option for 24 months.
4. The seller’s mortgage amount is $500/mo and he is willing to lease the property for $700.
5. The properties in the area are renting for $900, so you decide that you would want to take benefits from the lease option because you can make extra monthly income.
6. You also purchase the option below market value so you have a winning deal.

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Finally, those are the first steps in doing a lease option deal and you can see that it is very simple for you to do it. If you can wholesale these deals, you will be able to extract properties with little or nothing out of pocket and with no risk what so ever. After that, you will make the cash as much as you can if you do it with the right way.

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Lease Option Techniques

For the investor or home owner, the lease option is a popular method for investor or home owner to sell property and receive profits. These lease option techniques are provided to help both the buyer, the seller, and for the investor, such techniques as the sandwich lease and flipping lease options. There are several lease option techniques, all customizable to your specific situation.

For the Seller, here are some lease option techniques to consider :

• Consider owner financing as a lease option technique especially if the tenant is motivated, but simply may have trouble in getting conventional funding.
• You can require an option fee from the tenant. Requiring even few hundred or a few thousand gleans out those buyers who are less motivated to perform the option.
• Consider contract terms such as maintenance and repairs. Then the subletting, the one of the popular flipping lease options, and extending the option deadline.
• The lease option can be a complex document and combines the situation of both the conventional sales and lease contract. Consider a real estate attorney to help you or he can also suggests some advice for you.

As a Buyer, here are some lease option techniques :

• Build an escrow account to protect your funds if the owner not honor your option. Most owners are honest, but why take the chance.
• Start early to secure financing, especially if you need to clean up your credit. If you can start early, the more time that you have is better for yourself. Remember, in most cases you won’t get your money back if you don’t perform your option.
• You must make sure that you agree with contract language to maximize your lease option techniques.
• Include a clause to assign the lease to a third party, if indeed you cannot find financing, you can assign it to someone who has.
• Have the document notarized and record it in public real estate records to encourage the owner to honor the option.
• The right to extend the option deadline gives you a cushion should the final closing day approach before you’re ready with financing.
• Consider sharing costs of maintenance with the seller, since you both have interest in keeping the property in pristine condition.

Source : ezinearticles

The Advantages and Disadvantages of Buying a Lease Option

A Lease Option is technically a lease (rental) with the option to purchase. You are renting the home but have the right to purchase the home at anytime during the rental period at a pre-determined price. A lease option also can be a very favorable way to purchase a home because it provides the advantages of home ownership without the disadvantages of ownership.

The main advantages include: (1) No mortgage fees (2) less for a down payment

When structured property, there really are no disadvantages to a lease option relative to purchasing the home with a mortgage. When compared with renting, the major disadvantages of a lease option include: (1) pay more money upfront than renting (2) you are responsible for repairs, not the landlord. Each advantage and disadvantage will be discuss in greater detail below.

1. Advantage : No mortgage fees. This is because a lease option is technically a rental, the agreement is between you and the seller. Then it is also because of the bank is not involved, there are no bank fees, meaning that you don’t need to come up with the $5000 to $9000 that it costs to get a mortgage. However, eventually you will have to get a mortgage if you decide to stay in the home long term.

2. Advantage: Less for a down payment. Like the mortgage fees, because of the agreement is between you and the seller, the money down is negotiable, and sometimes not required at all, though the amount down typically ranges between $5000 and $10000 dollars. This is still better than the bank will require.

3. Disadvantage: Pay more money upfront. Typically a lease option requires a greater amount of money upfront than renting. This is not always the case and depends on how desperate the seller is the lease the home. Generally you can expect to pay twice what you normally would put as a deposit on a comparable rental.

4. Disadvantage: Responsible for repairs. One nice thing about renting is that the landlord is responsible for repairs. In a typical lease option, you are entirely responsible for maintenance of a home.
Finally, there are both advantages and disadvantages to buying a lease option. When compared with the buying the home with a mortgage, there is really no disadvantage. But when compared with renting, a lease option is a relative low risk investment for little additional out of pocket expense. The key is in the terms of the agreement between you and the landlord. The terms are negotiable, so make sure that you will do so. To summarize, a lease option can be a win/win situation for both buyer and seller. If you are looking for a home but don’t have enough for a regular down payment or are not sure if the market is going to get worse before better, you can consider a lease option and rest easy.

Source : ezinearticles

Why Lease Options Work in a Bad Economy

In a bad economy, the real estate market usually is the one of the first to shows the signs of distress. There are certainly no real estate investing secrets about the fact that people are not able to get credit, they have lost their jobs and everyone is struggling. It really is not the best time to be entering into a huge financial obligation like buying a home. This means sellers start to get desperate and more homes flood the market as people need to sell or risk losing their homes to foreclosure. There are not enough of buyers. Banks make it even more difficult since they stop lending and start being very picky about whom they lend to. This leads many sellers to consider a lease option on the property. For an investor, this could be a great opportunity to make a nice profit with a lease option agreement.

Why a Lease Option Works

This is the one reason of the real estate investing secrets that works in a bad economy is that there is no lender involved. Instead of making a deal with a lender on a mortgage, it is just the seller and buyer making the deal. The seller agrees to sell the property to the buyer at the end of the lease term and the buyer agrees to pay the monthly lease payment each month until the agreed upon date when they have the option to buy. It is important to note that, if a buyer doesn’t decide to buy at the end of the lease then they do not have to. But if the buyer wants to buy, then the seller must sell for the buyer.

Why This Works For Investors

Investing is real estate when the market is rough is not always the best financial situation. Many investors suffer some great financial losses since it becomes difficult to sell the houses that they have bought. With a lease option, the investor can rent out the property during the lease, which means the renters will pay the monthly lease payment for the investor. At the end of the agreement, if the market has not rebounded and the investor sees no possible way to sell, they can walk away.

Some Things To Keep In Mind

If you choose to move forward, this is one of the real estate investing secrets there are some things you will want to keep in mind so that you come out on top of this deal. You need to make sure that the monthly lease payment is not more than what you can reasonably charge for the rent on the property. You also need to do some research on the area and to make sure that in a good market that you will be able to sell the property. After that, also be sure that you have the potential renters lined up so that you won’t be stuck with the house sitting vacant and having to pay the monthly lease payment.

Finally, there are many ways you can lose money on real estate investing during a recession, but you may trying out lease options because it may actually help you come out on top. Then you may be able to make it through the recession without losing anything and actually making a profit with this creative investing idea. And there you have another of the real estate investing secrets.

Source : ezinearticles

Lease Option Real Estate Investment

Lease Option Investment

A lease option is basically a rent-to-own contract for a piece of real estate. The buyer signs an exclusive contract to have the buying rights to a property after a given amount of time. When the allotted time expires, the buyer can do one of two things, that are buy at the price agreed on when the contract was signed, or don’t buy the property and forfeit down payment.

To make this easier, let’s take a look at this from a buyer’s eyes.

Buyer

Why would anyone use a lease option for real estate investing? Try risk management. If you were shopping for a home a few years ago (before the market went bad) but were unclear if the area would be hit by recession, you could use a lease option to pay monthly rent and then wait for the contract to expire. The next step is you would be to get the property appraised. As a buyer, a lease option means that you do not have to buy the property. So when you look at the home appraisal after a few years, you compare the current market value to that of the agreed upon purchase price. If the home is worth more than what you agreed, you can purchase it and gain instant equity. But, if the property went down in value, then you can leave the deal with no ties and are only lose the down and monthly payments.

Now, let’s talk about the seller.

Seller

During these poor economic times, it’s very difficult to sell your property since there are many sellers polluting the market and increasing the number of unsold houses. The excessive inventory lowers overall prices. Now, for some reason, so you need to sell your property as fast as you can and fast or cover the payments. Lease options can do both and here is how. Thanks to the financial education available, many people want to buy a home but do not have the credit or the full down payment that needed to buy a home. These people are ready and willing to buy a property but they can’t get a bank to look in their direction. Hence why a lease option for a low down payment that accepts medium to poor credit has such a strong customer base.

Finally, lease option real estate investment is a rent-to-own strategy that works through signing a contract for exclusive buyer privileges at the end of the agreed upon time period for an agreed upon amount. This contract can be very easily work to the benefit of both the buyer and the seller, and allows for property sales at your asking price even in recessed markets. So i suggests that lease option real estate investing should definitely be considered by either the investor, the buyer, or both.

Source : ezinearticles

Ways To Find Lease-Option Properties

You’ve decided that you want to buy a home creatively and you are looking for a flexible seller that would allow you to buy on a lease-option. Maybe you don’t quite have the 20% down that many lenders are asking for these days. Maybe you had a recent financial challenge that bruised or destroyed your credit and you need time to improve it. Or, perhaps your financial challenge led to a bankruptcy, foreclosure or having to sell your last home on a short sale. Regardless of the reason, you realize that getting back to being a home owner is an important next step and that buying a home on a lease-option is a way for you to do it right away.

Now that you have decided to do it, how do you find a seller that is willing to do a lease with an option to buy? There are some ways to find lease-option properties.

1. Contact Landlords With Properties For Rent

Some landlords that are advertising their properties for rent would actually consider or would even prefer to sell the property. Some landlords are only renting because they couldn’t sell their property in a timely fashion and could not afford to make payments on the property while it sat vacant. You can contact landlords and ask them if they’d consider to selling the property too.

2. Have a Real Estate Agent Do The Work For You

Calling sellers and landlords is time consuming even if it is worth it. There are a few great real estate agents that are knowledgeable and willing to do this work for you while representing you as a buyer in the transaction. Some will charge you an up front fee for this type of work that you will often get back many times over by the negotiating and deal structuring experience they bring to your corner by representing you. Some will do it without an upfront fee and will be paid a commission on the sale in the same manner that most real estate agents are paid on more traditional transactions. From my experience, there are probably only about 1 or 2 real estate agents out of 100 that really have the knowledge to work on creative transactions with you, but finding one is an immensely valuable resource that you should rely heavily on.

3. Marketing To Have Sellers Contact You

Many real estate investors understand the amount of work that is involved with finding sellers that would sell creatively. Many of these investors are willing to put out marketing to have sellers that are more likely to do a transaction like a lease-option contact them directly instead of doing the manual labor of contacting many sellers and landlords. They are often willing to spend $1,000 on marketing to have the sellers come to them instead of expending $1,000 of their valuable time sifting and sorting through sellers and landlords that may or may not be interested. By putting out marketing they end up talking to a very small number of sellers that are already willing and eager to work with them on something more creative in a win-win transaction.

Conclusion

Finally, whether you decide to focus on the easy-to-find already advertised properties or you decide to do the extra work to get what will often be better deals by calling sellers or landlords yourself, i think you will find that a little bit of extra work up front is definitely worth the effort as you go down the road of home ownership. Of course, hiring a real estate agent to do the work for you is an easy decision and a smart decision. They do the work often for a nominal up front fee or sometimes a fee that comes from the transaction itself. Or, if you’re willing to invest a little money to save yourself time and you want to do it yourself, you can always put out some marketing to get sellers to come to you. So, no matter which method that you use, i recommend that you must taking the step to own your own home. Go for it.

Source : ezinearticles

The Common Problem of Least Option to Avoid

Nowadays, many investors very love lease options. This is because this type of real estate agreement can be a low risk investment that allows you to make a nice profit in the end. It is a wonderful option for a new investor who doesn’t have a lot of capital to work with or for an investor that wants to get started slowly. It just because of lease options are popular does not mean they are hassle free. No real estate deal will ever be completely without its problems. If you are interested in lease options then you should listen to the following warnings. The following are the ways to avoid common problems that investors have with lease options.

Check Out the Seller

For investors, you must always check out the seller and make sure that the current mortgage is in good standing. If the seller has missed any payments or if there is a threat of foreclosure, then you must not to continue with that sellet. You must also check on taxes to be sure there are no back taxes. You could end up being the one responsible for paying any money owed or in the worst case scenario the house could be pulled out from under you by a bank foreclosing on it and there will be nothing that you can do for it.

Hand Out Disclosures If You Sublease

Even if you do not own a property, but you are renting it or subleasing it, you have the responsibility to hand out federal and state disclosures. This includes informing tenants about lead-based paint, which is mandatory if the house was built before 1979. Before you sublease the property, you must make sure that you know about what your legal responsibilities are regarding disclosures.

Don’t Sign a Contract That You Don’t Completely Agree With

Too often investors think a lease option contract is set in stone. You have every right to negotiate. You can negotiate on all points. You must make sure the contract is exactly how you want it or don’t sign it. You probably don’t have to worry too much about the seller walking away because in the case of most lease option situations, the seller is at their last resort and need someone to buy this property. You are in the position of power in this deal, so take advantage of that and get a contract that will makes you happy.

Know Your Rights

Every now and then there is a seller in a lease option who ends up not going to sell. It is important to recognize that you have the upper hand here. The lease option contract states the seller must sell. It is not an option for them. You are the one that has the option to buy or not to buy. If a seller tries to back out when the time comes for you to buy the property then you have every right to sue them for ownership and in most cases you will win the fight with no problem.

Finally, so if you are prepared or ready before entering into a lease option, then you should have a good experience. Most of the investors who have sworn off lease options have done so because they were not prepared or they did not understand the lease option process. So, you must be smart and know what the process involves and you should come out good in the end.

Source : ezinearticles

Important Things To Know Before Buying Property

Property laws vary from state to state but there are general guidelines real estate buyers would do well to know before investing in property. It isn’t simply a matter of having enough money to purchase real estate: you want to make sure it doesn’t turn out to cost more in the long run.

The value of property appreciates if it’s structurally sound, has essential amenities such as electricity, plumbing and water supply and is located in a neighborhood with easy access to hospitals, schools, colleges, transportation hubs, offices etc. Location is so important that it’s often the single factor that influences resale value.

Can you build a house on land?

You may have found a nice plot of land to build a house on. But can you? Some states have zoning restrictions on building houses and finding out what the laws are will eliminate expensive problems.

Know that buying land and building a house will cost a small fortune. Construction isn’t cheap especially when building for a family. The cost of materials is high and you’ll have to find a trusted contractor to advise you along the way.

Visit a house/land several times a day

When house-hunting, it’s wise to visit properties several times in the day. Evening and night visits mask problems with the house, noise levels of the neighborhood and intensity of traffic. Some buyers may be looking for a quiet street but won’t be able to tell the difference at night.

If land is being purchased, find out how close it is to amenities and whether there are any upcoming plans for commercial real estate construction. Some buyers inadvertently find themselves stuck in the middle of a commercial hub they didn’t anticipate would be built. Noise, traffic and crowds can mar the peacefulness of any location.

Do a house inspection

This is a vital part of the house-hunting process and the services of an inspector are required. Obvious problems like chipped or broken stairs, faulty doors and windows and peeling paint are cheaper to repair than those you can’t see. Inspectors may use tools like thermal imaging and draw on their expertise to pinpoint problems with insulation, plumbing and unsound foundations. The cost of an inspection isn’t very cheap but is a lot less expensive than being saddled with big repair works later on.

Check taxes

Some areas reappraise housing tax so it’s important to find out what the recent taxes are on a house. If you purchase property at a good deal only to be bogged down by rising taxes every year, you’ll take longer to pay the mortgage and the cost of maintenance will rise.

Check past renovations

The seller you approach may have made renovations to the house in the past. If this is the case, find out what it cost and what improvements were made. The cost will tell you if quality materials were used. Find out the date of the renovations as well to give an idea of whether you’ll need to make further improvements in the near future.

Don’t buy for short-term stay

Buying a house cost much more than renting one, at least for short stays. Don’t make the mistake of purchasing property if you don’t intend to live in it for at least several years. Paying off a mortgage takes time and a year or two isn’t enough for most people.

Source : Ezinearticles

For more information please visit http://bit.ly/propertymillionaireintensive