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The benefits of a lease option

There are many benefits to a lease option:

1- You can charge more per month than you’d for a rental, because part of the monthly fee is the non-refundable option.

2- If the tenant decides not to purchase the home, the option money is yours.

3- You attract different clients-clients who are looking to possess a home, who take into account the home theirs while leasing it from you because they’re paying into the equity of their future purchase. Even if they decide to not buy at the end of the lease term, they’ve probably cared for the property better than typical renters.

4- You can help people own homes who might not otherwise be able to purchase, because they’ll be building up a down payment a small amount at a time.

Because you still own the property, you get the tax write-off during the lease period, and if the tenant defaults, you’re still on the deed and can re-sell the property after a simple eviction process (not a foreclosure).

The buyer benefits, as well. Not only do they get to slowly build up a down payment with the option cash, but they also have a predetermined price for the house. If the market suddenly swells, they realize the additional equity when they build the purchase.

You could make money with this method without even owning the property. It is true, and it is easier than you think. All you do is find motivated sellers who are willing to sell to you on a lease option so match those homes with buyers who want to buy on a lease option. It’s really that simple. Legal tip to remember,- in order to prevent problems ought to your potential buyer default, don’t ever let them pay the taxes and interest on the property and always refer to them as a tenant and not a buyer. This will secure your right to evict and not have to foreclose on defaults.

Source: ezinearticles

Benefits of the Lease Options

Increasing the financial gains and reducing the risks are the main aims of an investor because these will help an investor to build his or her investment portfolio. If the investor could be a real estate investor and he invests in the Lease purchase real estate deals then the financial gains become more secure and the exposure to risk is also limited. The financial gains will become secure and the risk will also be limited because the lease purchase agreement will allow the investor to use the property and check the advantages and disadvantages after paying the lease amount to the owner. If there are too many disadvantages associated with the property and the investor feels risky to continue in the deal then he can withdraw himself from the deal.

The benefits of the lease options are not only to the investors but also to the sellers. The sellers also enjoy a lot of benefits from these deals. These deals are better than the regular rental arrangement. the benefits enjoyed by the sellers are explained below.

Higher amount of cash inflow or upfront payment

In the regular rental arrangement, the homeowners get only monthly rental but in the lease purchase deals, the homeowners are paid option fee. The option fee is paid upfront to the homeowner and is quite the monthly rental. So a homeowner has more profit in leasing his home rather than giving it to a renter on monthly rental.

Higher selling price

The total amount that a seller is paid for selling his property is more than he will make in the normal selling because the total selling price won’t only cover the total sale price but also the rental during the lease period.

Minimal Maintenance cost

The maintenance cost for the houseowners will be minimized because the total maintenance cost of the home will be shared by the tenant. The tenant is responsible to share the maintenance cost because the tenant is also considered as the partial owner of the property during the lease period.

Attract better tenants

The property of the owner will be maintained because the maintenance responsibility is shared by both the owners and tenants. The well maintained property would attract more tenants or the buyers and if this tenant doesn’t successfully close the deal then the homeowner will begin his deal with the next reliable and high paying tenant.

Tax benefits

The monthly income made from the lease purchase arrangement is classified as monthly rental income. The taxes are reduced because the rental income is considered as the passive activity income and these are the tax benefits to the homeowners.

All the benefits are more than enough to encourage any homeowner to sell his property through the lease purchase agreement.

Source: ezinearticles

Benefits of buying and selling on Lease Option

You might be asking yourself what all the fuss is about lease options. Well there are a few reasons why investors have been getting hot under the collar about them.

Now, i will list out the benefit of buying and selling on a Lease Option :

Better Homes

Benefits of buying on a lease option :

🚩 There is no need to get a mortgage. You can simply recycle the seller’s mortgage. This will speeds the whole process up and gets round the problem of lending being refused or delayed.

🚩 No deposit is required. It really is possible to buy a house for a RM!

🚩 Deals cannot be scuppered by a surveyor down-valuing a property.

🚩 You can give the seller a much better price for their property than with the traditional below market value purchase model and still make good money!

🚩 You can buy negative or little equity properties and still profit.

Benefits of selling on a lease option :

🚩 You will normally get an upfront option fee from your incoming buyer. This can range from a couple of thousand to tens of thousands of RM.

🚩 Your monthly cashflow is far higher than a traditional buy to let, typically about 20% higher. You can’t beat this for income investment property.

🚩 You can sell quicker and simply because you are making the property easier to buy.

🚩 You can sell to people who would not normally be able to get a mortgage such as self employed, people who are new to the country, people with bad credit records, and crucially, those who not yet have enough deposit.

🚩 Tenants and buyers will tend to do their own repairs and not call you in the middle of the night about a leaking tap.

🚩 Your buyer will generally be in there until they buy so you won’t have any voids.

🚩 Your tenant is going to own one day so is very unlikely to miss a rent payment.

🚩 When the tenants and buyer finally buys the property, then you will normally make a cash lump sum that known as the “back end profit“.

Source : property-investment-blueprint

Read these benefit properly and try to buying and selling on a lease option, then you will know that it really can bring many benefit for you.

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