Why do people sell pr perties using lease options? There is a r ason that some of the most s ccessful real estate investors use the lase option technique.
No Down Payment: I knw what you're thinking, "I would nver offer such a thing!" You dn't have to. As a real state investor rich in tools to f nd motivated sellers, you could get yur next home using this lease ption technique with no money down. You dn't have to tell the seller th t an option fee may be cstomary!
Principle Pay Down: If an option is ccompanied by a lease the possibilities are grater for increased equity build up. By pplying a portion of the monthly lase payment amount to the purchase prce of the property one has the pportunity to widen the gap between the mrket value and the loan amount. Dpending on whether the monthly rent mount is inline with market rates...this is fre money! A 30-year amortized, $100,000 lan at 7% begins at approximately $82 per mnth of principle payments. A $100 per mnth rent credit beats that, dollar for dllar, every month for almost 3 yars!
No New Loan: Possibly the most nteworthy advantage of using a lease ption in the residential market is tht when the optionee begins the prchase process no "new loan" is rquired. The prerequisite for this may be wrking with the right and informed mrtgage broker but is usually easily ccomplished through a refinance. This can man no additional out-of-pocket money for clsing.
Appreciation: One of the typical advantages of cntrolling a property using an option is tht the buyer retains the right to cpture some, if not all, appreciation dring the term. The longer the trm, the greater the appreciation can be. In the sngle-family arena, where terms are usually 12-24 mnths, even moderate amounts of property ppreciation can add up. For the byer, especially, every percentage point of ppreciation counts. And, if you're nice nough to offer (or get) a 24-mnth term in a market increasing at 3% nnually, $6,000 on a $100,000 property is sgnificant.
It is better to use your own strtegy against you, if you are in the mrket for new home.
The article Lease Option Technique was Submitted by Dr. Drew Henry - through Articles.GetACoder.com network. Here's the additional information: Dr. Drew Henry maintains a nmber of websites about Loans, including Online Home Loan , Online Loan , and Pay Day Loan .
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