The Lease Purchase Solution
THE BEST KEPT SECRET IN CREATIVE REAL ESTATE DON’T OWN……… control by RENT !!!!!
The Lease Purchase Solution !
Such blasphemy! What kind of successful investor would advise anyone to rent instead of becoming an owner?
The answer: a smart one!
What if I showed you a way to profit in real estate without large cash deposits; not having to apply for bank loans, no overhead, no maintenance, no taxes, insurance or home owner fees to pay. You would probably say that that type of investment does not exist or that such an idea is the product of the author’s wild imagination.
Well, it’s time to learn about the best kept secret in real estate: it’s called Lease Purchasing, known also as ‘renting to own’ or ‘leasing with an option’. Anyone can control real estate that generates immediate profit and/or positive cash flow without having to become a real estate expert and with- out looking at hundreds of houses. If you know how to rent, then you can put together all kinds of profitable and cash generating transactions with just a telephone. Lease Purchasing allows you to create small and large deals without depending on the bank.
Why Lease Purchase?
Controlling real estate through Lease Purchasing, whether it’s for your own home or as an investment property, is by far the superior method of finance. Lease Purchasing helps to remove the traditional adversarial relationships that exist between buyer and seller and produces greater profits.
In most real estate transactions there is a natural tendency between the buyer and seller to try and beat each other up. One wants a lower price and the other wants a higher one. Not to mention all of the other items that have to be negotiated. Next come all of the difficulties associated with deposits, qualification, appraisals, title companies, lenders, escrows, lawyers, etc., etc. Lease Purchasing eliminates these problems and lets the buyer and seller have a win-win experience and get the deal done.
A Lease Purchase is a process where a rental agreement is combined with a purchase or more specifically, an option contract. Price, length of contract, escrow instructions, rent credit and other pertinent terms are all negotiated in advance. The tenant/buyer has a percentage of his rent credited to the down payment or off the price. In many cases, more money is being applied monthly, than an actual mortgage payment would be to the principle.
All the parties concerned can benefit by doing a Lease Purchase transaction. Let’s examine the advantages for the buyer, seller and investor.
From the Buyer’s Viewpoint:
Generally, this is a renter who can’t purchase a home through conventional means. This buyer does not have a large enough down payment for a bank loan, minor credit problems, a new job, high loan to debt ratio or other reasons that make a traditional purchase of a home impractical (impossible) at this time. The buyer is aware of the advantages of home ownership (tax shelter, appreciation, security, etc.) and is eager for a chance to get involved in a home of his own and get out of the rental rat race. Our buyer can lock in the future purchase price even though ownership may not transfer for a year or more. A percentage of the rent can be credited toward the downpayment or off the price. During the terms of the contract, the tenant/buyer has time to check out the house, neighborhood and to obtain the best financing.
From the Seller’s Perspective:
If you are a seller the best way to get top dollar would be to Lease Purchase your home. Since you are being flexible on your terms you are entitled to get your full asking price and a higher than average or premium rent for your property. When you find a prospective buyer/tenant you normally receive option consideration. This is a nonrefundable amount, that in many cases, can be several months rent. If and when the buyer wishes to utilize her option, then you will hopefully receive your capital profits when escrow closes. If the buyer, however, allows the option to expire you also win since you can begin the whole process all over again and either renegotiate the contract or find a new tenant. In either case, you receive more non-refundable option consideration for the same property. If the property sells, then you use some of your profits to reinvest in another house or take back a seasoned note. The potential for profit for the seller is fantastic since a well negotiated deal will always reap profits at every stage of the Lease Purchase.
From the Investor’s Viewpoint:
The Lease Purchase has everything an investor needs to make prudent, profitable investments in real estate. Utilizing very small down payments (1-2%), an investor can control properties that normally require 10-30% without utilizing a lender nor going through the loan application circus.
A good deal can generate profits three different ways:
1. Cash upfront with option consideration 2. Cash monthly (rent) 3. Cash at the close (or a first class note)
Other strategies involve the assigning or flipping of the optioned property to a third party or just being a consultant for the buyer and seller and retaining a portion of the option consideration.
How about a way to make an upfront fee from a buyer who can’t qualify? Lease Purchasing enables you to consult with a buyer and still profit up front and at the close. Everyone has had potential buyers who, while making a good income, might have some trouble qualifying due to credit problems, downpayment, new employment, etc. By utilizing Lease Purchase strategies you can help your buyer get into a home quickly and be a hero to your seller.
1. High Cash Flow 2. No immediate need for bank qualifying 3. Retain full commission at close
4. Generate high volume of deals
5. New revenue source
6. More listings
In summary, controlling properties by renting with an option (Lease Purchasing) is the absolutely best way to be involved in controlling homes and obtaining great cash flow, high profits and minimum risk. Lease Purchasing can be the best way to create quick cash flow for the first time homeowner, the seasoned investor or the imaginative entrepreneur.
Want More Information ? Then read our free How To Manuel “The Lease Purchase 2010 Conversation” or call me , I answer my own phone (619) 421-4121-Claude Diamond