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.