Why do people use lease options to sell properties? The lease option method is used by some of the most successful real estate investors for a good reason.
No Money Down: I know what you're thinking: "I'd never do something like that!" There's no need to. As a real estate investor with tools to find sellers who want to sell, you could use this lease option method to get your next home with no money down. You don't have to tell the seller that it's normal to pay an option fee. ...
Why do people use lease options to sell properties? The lease option method is used by some of the most successful real estate investors for a good reason.
No Money Down: I know what you're thinking: "I'd never do something like that!" There's no need to. As a real estate investor with tools to find sellers who want to sell, you could use this lease option method to get your next home with no money down. You don't have to tell the seller that it's normal to pay an option fee.
Paying down the principle: If an option comes with a lease, there are more chances for more equity to build up. By putting a portion of the monthly rent payment toward the purchase price, the difference between the market value and the loan amount can be made bigger. Depending on whether the rent is in line with market rates or not, this could be free money. At 7%, the monthly payments on a $100,000 loan with 30 years and amortisation start at about $82 for the principle. A $100 rent credit every month for almost 3 years beats that, dollar for dollar, every month!
No New Loan: One of the best things about using a lease option in the housing market is that the optionee doesn't need a "new loan" to start the buying process. For this to happen, you may need to work with the right and well-informed mortgage broker, but it's usually easy to do with a refinance. This could mean that you don't have to pay any more money out of pocket to close.
Appreciation: One of the most common benefits of using an option to buy a property is that the buyer keeps the right to some or all of the property's appreciation during the term. The value can go up more when the term is longer. In the single-family home market, where terms are usually between 12 and 24 months, even small increases in value can add up. Every percentage point of growth is important, but especially for the buyer. And if you're nice enough to offer (or get) a 24-month term in a market that goes up by 3% every year, $6,000 on a $100,000 property is a lot.
If you are looking for a new home, it is best to use your own strategy against you.
