Tag Archives for " Lease option "

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

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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Lease Purchase – Secrets of Buying a Dream Home Through Lease Purchase

Buying a home gives happiness to any individual soul. Perhaps, there is nothing like the one that belongs to you. It is always a tendency that is built in the human beings that things that we own are really close to our heart and mean something entirely different. Many of them just dream about owning a home. Only some of them live it. Are you ready to live it?

There are some possible ways to make sure that even a middle class person has access to own his home. Lease purchase and lease options have made it so simple to buy homes that almost all of them are considering these options today. To top it all, the real estate market is not doing very well off late which has caused them all to opt for these different methods.

So how are you going to buy that dream home?

Knowing that Lease purchase is one good option, you can go by it. But before getting into it, you should question yourself if you can do this without facing any difficulties. It is important that you analyze your financial status completely and make a brief note on all that you are capable of doing.

Possible approach towards owning a home:

You have to sit down and calm yourselves first. Later, make a list of your monthly salary and try to learn how much of it you would need to maintain yourself throughout the month. Include all the possible expenses in it. Try to see how much you can save from your monthly salary. If it is well beyond the rental amount of money, then consider going for that home. Perhaps, this particular commitment might require you to cut down on some of the unnecessary expenses for some time. Of course, you are buying a home and this much of commitment is absolutely inevitable.

Later, do the reverse procedure. From your salary, eliminate the amount of money required to pay the rent. Later, from the remaining amount, refigure your budget. Stick to it completely. This is important because you will get an idea on how to manage your funds without wasting even a cent from it. It may really appear to be a silly thing. But, these small things can have a great impact on your buying capacity.

Within no time, say about two years, you will be a person who owns a home now! Remember, some things in life require a lot of dedication and patience. In the end, you will end up being the sole benefiter. That is fabulous right?

Source : Ezinearticles

7 Elements of a Lease Option

Lease options (or Lease Purchase or Rent to Own) are called ingenious and innovative, even though they have been around forever. They’ve also been called one of the only non-confrontational ways of acquiring real estate.

I’ve liked Lease options from the day I 1st heard about them. And there are a lot of things to like about them, they’re low risk, you need little or no money and no credit to do them, you can be in and out in a matter of days or stick around for a steady monthly income.

The 7 Key Elements

  • Lease Term

The Lease Term specifies from when till when the client is allowed to occupy the property, and as a result for how long the client is indebted to make Lease Payments.

The Lease Term will be adjusted down for less risk to the client or up for more security to the seller.

  • Lease Payment

The Lease Payment specifies how much money per period (week, month etc.) the buyer is needed to pay the seller in order to maintain their occupancy rights.

The buyer wants the Lease Payment to be low and the seller wants it to be high. The Rent Credit will be increased or decreased to compensate for a high or low Lease Payment.

  • Rent Credit

The Rent Credit specifies how much of the Lease Payment will be credited towards the purchase Price; if and once the buyer exercises their option to purchase.

The buyer needs the Rent Credit to be high and the seller wants it to be low. As mentioned, it will be adjusted along with the Lease Payment to come to an acceptable compromise.

  • Option Consideration

The Option consideration specifies how much the client is required to pay for the option to get the property.

Similar to the Lease Payment. the client needs the option consideration to be as low as possible, and also the seller wants just the opposite. Often, once a seller is motivated enough, they’re willing to accept a negligible amount of cash for the choice consideration, or even just a promise to keep the other terms of the agreement.

  • Purchase Price

The Purchase price is an easy one to work out. How much should the buyer pay if they decide to exercise their choice to purchase? This could be set at a particular dollar amount, or as a formula, as an example once the buyer is allowed to purchase the property for the balance of the existing mortgage(s).

Again, the buyer needs the lowest purchase price, and also the seller needs the highest. It’s no surprise that the next price is the main reason a seller would be willing to sell on a Lease/Option in the first place. generally speaking, this can be the main point of reference for all the other negotiation points.

  • Option Term

The Option Term specifies how long the buyer’s option to purchase will be in effect.

The buyer will want this to be as long as possible and also the seller as short as possible. Because of appreciation a purchaser can safely agree to a higher price in exchange for a longer option Term.

  • Renewal or Extension Terms

As a final point of negotiation, Renewal or Extension Terms will be agreed on one by one or collectively for the Lease Term and the option Term.

It’s quite common to find an option Term of a few years, with a Lease Term of twelve months that may be renewed year after year. The buyer will want to be able to renew for free, while the seller will either not need the buyer to be able to renew at all, or to pay for it.

Source: ezinearticles

Beneficial Lease Option Tips

Lease option tips benefit the seller and the buyer in an equal manner. they help in making a finance required for the transaction of a home deal. The lease option permits the tenant to buy the involved property within a time period of twelve to twenty four months.

Lease options are a good source for purchasing homes for the first timers of home buying who have not qualified for the finance options. they give the buyer’s time for getting their finances in shape for purchasing the property. The lease options are great marketing tools for the sellers of properties for finding good buyers.

Benefits of the Lease Options:

There are various benefits for the buyers as well as the sellers of the lease options. The lease option tips for the buyers are listed below.

  • The tenants get the facility of paying a small amount upfront for the house. This amount is smaller than the normal down payments.
  • The risk of a monthly credit rent helps in generating the down payment, resulting in a savings account for the buyers.
  • The buyers can enjoy the benefits of living in the house that they dream of now instead of renting an apartment and waiting to repair their credit.

But, this convenience isn’t available without costs. an option fee has to be paid by the buyers, additionally to any potential rent credits and the monthly rent. The seller will keep this money if the buyer isn’t able to work out the option.

The lease option tips for the sellers are as follows:

  • This option will increase the monthly flow of cash for the sellers.
  • This also helps in solidifying the cost of the property before the selling date. This rate of solidifying is good in the real estate market.
  • The lease option prompts the tenants in taking care of the property, as they have the intention of buying it in the future.
  • The sellers receive cash direct and can retain it if the tenant fails to exercise the option.

The contracts of the lease options are sometimes very complex in nature. the tips of lease options recommend that the language of the contract has to focus on the contract terms, rather than the price. The finding of buyers for the lease option, demands a considerable amount of time investment on part of the sellers.

But the lease option tips are an encouragement for the sellers to investigate the markets thoroughly for predicting the appreciation of the property’s value in the future. Hence, it’s recommended that the sellers invest time in forecasting the price of selling along with the search for prospective buyers of the lease option. Laws of the state have also to be investigated for ensuring abidance with the regulations for the mechanism of the lease options.

Source: ezinearticles

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

How to Make Money Using Lease Options in Real Estate

There are a lot of different ways to make money in the real estate world. you’ll get into the flipping part of it, the agency selling part, or even the leasing part. when people think about making money investment in real estate for the most part they’re looking for a way to make a large amount of money all at once. This need for the large sums is why flipping and becoming an agent are the common courses of real estate investing. making money using the leasing option can bring in a steady cash flow but you may get it in payments as opposed to one lump sum.

Leasing homes and apartments allow you to provide a living arrangement for families that need them. Since you own the homes or apartment building that you are leasing out you will be able to set the worth that you want your tenants to pay. ensure that you set the prices so that they’re reasonable or you can have problems finding occupants for your space.

Leasing commercial real estate is another great way to make money. find a building that’s easily accessible. you will want a building that’s around different successful commercial buildings. A building that has plenty of parking and space are more desirable than one that doesn’t. If the commercial property is in a very desirable space you will have no problems filling it. Once you have someone operating your commercial property you’re guaranteed to have a steady monthly income.

While most people assume that you have to either flip or become and agent to make money in real estate, the truth is that you will supplement your income quite nicely and permanently with the leasing option. Leasing real estate is a great way to play in the real estate game without having all of the loose ends to tie up in the flipping world, and all of the classes you have to take to become an agent.

Source: ezinearticles

Should You Buy Property On Leased Land?

Most people who are searching for a home to buy don’t realize that it is possible to buy a home on leased land. Far from being an uncommon practice most people assume that when you buy a house you also purchase the land it is built on, but more and more non-traditional home buying options (like purchasing a home on leased land) are becoming available as the economy and housing markets continue to struggle.

Here are a few things to know about buying a property on land for leased as well as some pros and cons to help you decide if this is a viable path for you to go down in your home buying journey.

When looking at homes for sale you can tell if the one you are interested in is on leased land if the advertisement says something like ‘manufactured home’ or ‘leasehold interest.’ Also be aware of the word ‘association,’ which will be used to describe areas of the property that you have not explicitly purchased yourself. The price for a home on leased land will also be much lower than the average market price for other similar houses in the area. Leased-land properties are generally built close together and rarely have amenities like a private pool attached to them.

Mortgages are taken out on land for leased properties, but a monthly payment will likely be lower because the original purchase price was cheaper. A fee that you wouldn’t normally have to pay for a traditional home is a land lease fee, which will vary by property. You may also find that some leased-land properties have massive home owner’s association fees that are used to cover the upkeep and maintenance of the leased land areas.

If you are considering buying a property on land for leased it will be beneficial to come up with an outline of your budget for a regular property and for the leased-land property. When you write down the savings and additional fees for both you might find that one is a step above the other when it comes to benefits and price (and it might not be the property you think!). Be reasonable when it comes to assessing your financial goals in the purchase of property, leased-land or otherwise.

You will also want to find out from the owner or realtor how much time is left on the lease. Generally you want to look for properties with a long lease left as you won’t have to worry about the changes that will occur if the lease ends while you are still living there. If the lease is shorter you might find it difficult to get a mortgage and finance your home. If the lease is up soon and you decide to purchase the property anyways, make sure you know what you will happen to the property when the lease ends.

Buying a home on leased land could be a sound financial decision, but weigh your options before you rush into anything.

Source : Ezinearticles

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Success With Lease Options

To say that the mortgage market has changed from two years ago is an understatement. Over 70th of banks have tightened their standards and most will wait till confidence has been restored in the market before relaxing their qualifications.

So what is the solution for those who once would have qualified for a mortgage but no longer do?

More and more, those who want to be homeowners are turning to Lease options as their short term solution.

Is this is a good thing?

Like anything else, it really depends on the quality of the program one enrolls in. The reality is that most people who enter into lease options fail. Here are 5 key considerations that will help ensure success.

1. Many companies and investors actually don’t want you to succeed. Sadly, this is a common system taught by many of the nation’s top investment gurus. Their plan is simple — collect option money from you upfront, do nothing to ensure that you are in position to purchase the home and then set the price so high that even if you do everything right, you still can’t buy the house because no bank would finance it! They keep your option money, you’re forced to move and they repeat the process with someone else. Avoid investors who don’t have your best interest at heart. If they don’t seem concerned about credit repair and helping you get back on track, they probably do not intend for you to ever buy the house.

2. Another common reason for failure is simply procrastination on the tenant’s part. you intend to repair your credit….some day. The truth is that repairing credit takes time. Usually more than a year. it’s IMPERATIVE that you just begin as soon as you sign the lease and remain diligent about it throughout your rental term. Ideally, you will work with both a Loan Officer and a reputable credit repair company.

3. Along the same line, a lease term that’s too short can spell disaster. You need to work with someone who understands mortgage qualifications and ensure that your lease term is long enough for you to qualify. A twelve month lease term, unless your credit is already fairly good, can almost always lead to failure.

4. Another common issue is not saving for a down payment. Yes, you hope your rent credit are sufficient to cover your down payment. But the reality is that no one knows what the banks are going to be doing two years from now. It’s better to be safe than sorry—save, save, save!

5. You would not accept a mortgage that didn’t report to your credit. Why accept a lease option? The mortgage market is tough enough as it is. You need all the help you’ll get. Twenty four months of on-time payments will do a wonder to help improve your credit score. It’s not that difficult for the seller to set up and it shows commitment on both sides.

Lease options can be good for both buyers and sellers, but they must be done right!

Source: ezinearticles

Real Estate Beginners Can Profit From Lease Options Strategies

For many investors, the use of a Lease Option Strategy makes good sense. Here’s why.

HOW IT WORKS

For beginners with little or no cash, this might be a very good strategy indeed. The Lease option Strategy has 2 components. under the law, an option is a way for a real estate investor or buyer to enjoy the right — but not necessarily the requirement — 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 while not essentially having an obligation to buy. You may then lease the property (retaining the choice 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’d 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 $500 per month rent and a $100,000 purchase price with the owner. You might then sub-lease the property out to a tenant for $650 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 $125,000, 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. wherever 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 may profit by using the Lease choices strategy in your favor in those real estate markets. look for Lease choice opportunities in single-family homes as well as duplex and apartment buildings. With a property tied up in a Lease option, this provides you time to arrange suitable financing or to find your own arrangement in which you buy the property whenever your tenant is prepared to buy.

Source: ezinearticles

Whenever I’ve spoken at various investor and business workshops around the country, one of the most common questions from real estate investors during a seminar break is “What’s the best way for a beginner to get started without too much risk?”

Article Source: http://EzineArticles.com/443367

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