Have you ever had bad renters? Late Payments? Damage to your property? Land lording has never been fun, especially when you have a nice home with bad tenants. Have you ever tried to sell a home and it seemed as though nobody was interested in it? The Realtor couldn’t sell it after they convinced you to list your home. You thought about renting it, but realized that wouldn’t work due to Land lording headaches. You must leave town and the home sits vacant. Your home sits vacant and you have no hope of it selling. You will probably make three or even four mortgage payments. Your insurance company could cancel your homeowner’s policy if the home sits for 30 days or more. (Read your policy!) Your home sits there with no bites and you think about reducing the price to sell it quickly. You know you need to do something NOW! Here’s the solution: Lease-Option.
WHAT IS A LEASE OPTION?
LEASE + PURCHASE OFFER = LEASE-OPTION AGREEMENT
Definition:
A Lease-Option is simply a lease agreement combined with a purchase contract, which gives the new tenant/buyer the right to purchase your home under specific terms.
LETS LOOK AT A LEASE-OPTION EXAMPLE…
Here’s an example that we have actually done. The seller wants $135,000, rent of $1150 per month with a rent credit of $200, and a term of 2 years.
Sales Price: $135,000 Monthly Rent: $1150
Rent Credit: $200 Each Month Term: 2 Years
Rent credit is only a paper credit. It is deducted from the purchase price.
Usually there will be a monthly rent credit of 15%-25% of the rent. This credit is applied to the purchase price ONLY! So if the new buyer buys in 1 year, they would have a total of $200 x 12 months (1 year) = $2400. Subtract the $2400 from the total sales price of $135,000.
$135,000 – $2400 = $132,600
(This is the new purchase price)
(Rent credits are a great incentive for buyers to always pay you on time or they do
not receive credit for that month.)
What’s The Point?
You may be asking yourself, “What’s the point of this real estate lesson?” Well, first we are not Realtors; we are a group of private investors that specialize in Leasing, Buying, Fixing, Marketing, and Selling Houses. We offer a unique Lease-Option plan that will fit your needs. We will Lease-Option your home from you at an agreed price and terms. We will find a suitable tenant/buyer that we will qualify, to live in your home. When our tenant/buyer is ready to buy, we will help them get financing to buy your home. We will then buy the house from you and the new buyer will buy the house from us. Our price is higher than what we bought it from you. This is a WIN/WIN situation.
SELLER BENEFITS:
• Build Equity every month
• No long vacancies
• Safer than conventional rentals, better quality tenants
• No management headaches
• Receive full asking price
• Receive non-refundable down-payment
• No or little maintenance costs or repairs
• Tax benefits
Why Don’t I Just List It With A Realtor?
It won’t hurt you to list your home unless it doesn’t sell. However most real estate brokers simply just list the home on the MLS and hope to get a bite. The first problem with listing your home is that there are thousands of homes on the MLS. Realtors also have several other homes they are trying to sell as well. The second problem with listing your home with a Broker is that they don’t understand what a Lease-Option is or they will say there isn’t enough money for a commission.
When we agree with you to Lease-Option your home from you, we take it seriously. We treat your home as if it was ours. We are constantly thinking of ways to move your house faster, so you can get on with your life.
What If The Tenant/Buyer Tears Up My Home?
Well, there is no guarantee that the tenant will not damage your home. But under our agreement, if that happened, we would repair it at our expense. Our goal is to find a buyer that will be able to qualify for a loan. It has been our experience that Lease-Option buyers treat the home as if it was their own, so damages are rarely a problem.
What About A Property Manager?
A property manager will charge you around 10% of the monthly rent. Sometimes you will need to follow up on property managers to make sure they’re doing their job. Anytime there are repairs needed, the property manager will call a repairman to fix the problem at your expense. Not only are you losing 10% every month but also you will be paying all repair costs.
