The realestate lease purchase option -- also called a rent to own -- can reap profits for the savvy seller, especially in a slow housing market. Here are some lease option to buy explanations that can give you the confidence of an expert in this creative financial technique.
To maximize the realestate lease purchase option requires one to take a look at the immediate situation:
Is the housing market slowing down in your area? Secure a buyer now at today's market rather than at a lower price several months down the road.
Has your property sat vacant, trying to find a conventional buyer? Offering the realestate lease purchase option opens the door to buyer/tenants anxious to move in now.
Do you have a qualified buyer/tenant either in your property or ready to move in? Qualified buyers are the ideal candidate to work with. Lease option to buy explanations maximize the seller's outcome with qualified buyer/tenants.
Are you ready to increase monthly cash flow and cover the PITI of your property? Exercising the realestate lease purchase option will increase monthly cash flow through rent credits, which is covered below in lease option to buy explanations.
If you're ready to exercise the realestate lease purchase option, have a buyer/tenant ready to move in, a contract will be your next step. Lease option to buy explanations assist both the buyer and the seller into a win/win situation.
Payment - most payments involve an option fee paid to the seller upfront. Not to be confused with the security deposit tenants pay to move in.
Option fees - paid upfront to the seller, viewed as a commitment of the buyer/tenant to the realestate lease purchase option.
Rent credits - applied to the final down payment, paid monthly by the buyer/tenant at a rate higher than the market rate to cover your PITI (principle, interest, taxes, and insurance).
Duration - usually a twelve month term wherein the buyer/tenant is obligated to purchase the property at the end of the duration.
Security deposit - unlike the purchase option fee paid upfront, security deposit can still be required and is refundable, should the buyer/tenant not wreck the place.
Subletting - lease option to buy explanations see this as a tactic used by buyer/tenants looking to flip the property; if you want to keep it simple, don't include this in your contract. Keep it between you and the buyer/tenant.
Damage to premises - can be covered through the security deposit, which still holds the buyer/tenant responsible for damage to your property.
Maintenance and repairs - make it a win/win for both and split the costs for you as the current owner and for the buyer/tenant as the soon to be new owner.
Purchase price - research the market before you set the price and know as a seller, even in a downward trending market, the realestate lease purchase option is a basic supply and demand dynamic of more buyers than there are sellers. Get your best price.
Down payment - paid via the rent credits or as a lump sum payment when the purchase is exercised.
Closing date - lease option to buy explanations view this is the same as for conventional sales contracts and a critical date when maximizing the realestate lease purchase option.
Purchase option deadline - normally within a twelve month period and obligates the buyer/tenant to the closing date at the agreed upon purchase price.
The realestate lease purchase option can be customized to your individual arrangement. The lease option to buy explanations provide some clarifications to elements of the realestate lease purchase option.
Real estate investors, like us, can help motivated sellers move their properties on a lease option and help motivated buyers (even with poor or damaged credit) buy a home on lease option.
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