Lease Option Technique

Why do people sell properties using lease options? There is a
reason that some of the most successful real estate investors
use the lease option technique
No Down Payment: I know what you’re thinking, “I would never
offer such a thing!” You don’t have to As a real estate
investor rich in tools to find motivated sellers, you could get
your next home using this lease option technique with no money
down You don’t have to tell the seller that an option fee may
be customary!
Principle Pay Down: If an option is accompanied by a lease the
possibilities are greater for increased equity build up By
applying a portion of the monthly lease payment amount to the
purchase price of the property one has the opportunity to widen
the gap between the market value and the loan amount Depending
on whether the monthly rent amount is inline with market
ratesthis is free money! A 30-year amortized, $100,000 loan
at 7% begins at approximately $82 per month of principle
payments A $100 per month rent credit beats that, dollar for
dollar, every month for almost 3 years!
No New Loan: Possibly the most noteworthy advantage of using a
lease option in the residential market is that when the optionee
begins the purchase process no “new loan” is required The
prerequisite for this may be working with the right and informed
mortgage broker but is usually easily accomplished through a
refinance This can mean no additional out-of-pocket money for
closing
Appreciation: One of the typical advantages of controlling a
property using an option is that the buyer retains the right to
capture some, if not all, appreciation during the term The
longer the term, the greater the appreciation can be In the
single-family arena, where terms are usually 12-24 months, even
moderate amounts of property appreciation can add up For the
buyer, especially, every percentage point of appreciation
counts And, if you’re nice enough to offer (or get) a 24-month
term in a market increasing at 3% annually, $6,000 on a $100,000
property is significant
It is better to use your own strategy against you, if you are in
the market for new home

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