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.