There are two sides to every coin when it comes to lease options. Here are some real estate lease option tips that balance the coin so that it falls on its edge, benefiting both buyer and seller.
A lease option is a lease with an option for the tenant to purchase the property, typically within twelve to twenty-four months. First-time and unqualified homebuyers view the lease option as an ideal financial technique, giving them time to put their financial house in order. Take a look at the following real estate lease option tips for the buyer.
Real Estate Lease Option Benefits and Tips for Buyer (Tenant):
- Pay little cash up front (certainly much smaller than a typical down payment)
- Monthly Rent Credit Generates Down Payment – A Forced Savings “Account”
- Live in the house you intend to buy
However, this convenience is not without cost. The tenant typically pays an option fee plus rent credits (10% to 100% of the rental rate), in addition to the monthly rent. The seller keeps this money if the tenant does not exercise the option.
With that being said, here are real estate lease option benefits and tips for the seller (landlord):
- Increase monthly cash flow
- Solidifies the price well before the sale date – good in a slow market
- Ask tenants to take care of the property they intend to buy
- Receives option money in advance and retains it, in case the tenant does not exercise the option
It is also a great marketing tool for sellers when trying to find buyers for lease options. For example, you contact a corporate relocation office about your property and they refer a new employee to the area to lease your property. After six months, she takes the new job, wants to buy the property from her, and the conventional lease is changed to a lease option. The buyer secures the option to buy the home and you have a quality tenant (buyer) living in your property.
Lease option contracts can sometimes be complex, and real estate lease option advice suggests that contract language focus on the terms of the contract, rather than simply price. To ensure an amicable closing, put everything in writing. Finding buyers of lease options is indeed an investment of time and a good buyer in hand is worth two in the bush.
It may be obvious, but real estate lease option advice encourages sellers to dig deep into the market to predict a property’s value a year from now. So while you’re trying to find buyers of lease options, invest the time to properly forecast the sale price. In addition, real estate lease option boards recommend researching your state’s laws to ensure compliance with regulations regarding the lease option mechanism.
For the seller, the secret is finding lease option buyers who see the merits of this financial vehicle. How do you find buyers of lease options? Place an ad in the newspaper or contact a corporate relocation office for help finding buyers for lease options. Mingle with interacting mortgage bankers who can help you find buyers of lease options.
Another option is to contact real estate investors like us here at Buy-Sell-Michigan-Real-Estate [http://www.buy-sell-michigan-real-estate.com/rent-to-own-home-in-michigan.html] and have us find you a buyer for your property. We make it very easy for you thanks to our experience. We receive a small allocation fee for our efforts, and that takes the marketing work off of you.
The Internet is also a great way to find buyers of lease options. The same Internet sites that help sellers help buyers, bridging the gap between two parties seeking each other. These sites, however, often have hefty fees that they charge potential home buyers.
You can also join a forum that shares tips on real estate lease options. Information like these real estate lease option tips and how to find lease option buyers are readily available if you search hard enough.