Real Estate Investing_Lease Purchase

Lease purchase or lease purchase option is a contract between buyer and seller which is a form of financing for purchasing a home. Buyer leases the property for a certain period of time then agrees to purchase the home at the end of the lease at a set price.

The buyer puts down option deposit which will later will be added to purchase price. Buyer also pays monthly payments like rent which some portion of it, will go to pay principal of the mortgage of the home. Then after lease agreement is over, the buyer has option to buy the property.

If the buyer decides not to buy the property or doesn't pay monthly payment, the seller keeps the option deposit and the lease option agreement is no longer in effect. If the buyer pays monthly payment on time and decides to purchase the home at the end of the lease, the buyer purchase home with some equity already in it. The set price buyer agrees to purchase, includes her option deposit and also portion of monthly payment paid during lease period.

This is truly win win situation of real estate deals for both buyer and seller. This is a great way to purchase home for a buyer who is not qualifying mortgage or doesn't have enough money to put as a down payment. Also, it is a great way to sell a home when the demand for home is low or want to make profit tenant-nightmare free. This is also a great for investor who wants to sub-lease option purchase. Investor has the control over property without using much money. Let's look at some benefits.

Lease purchase option buyer's benefits

Little money up front: Unlike mortgage, buyers need option deposit which is much lower than down payment. Option deposit will go to purchasing the home at the end of the lease.
Equity growth: Some portion of monthly payment goes to pay principal of mortgage. It is much better than rent, buyer actually saves money and grow equity. It is better than mortgage because you need little money to purchase home and equity growth is faster. Usually at the end of the lease, the buyer needs little or no need for down payment since there is already equity saved in the property.
Little or no down payment at the end of closing: Buyer has already established credit paying monthly payment and has equity in home so often there is no or little down payment required at closing.
Assign of lease: Buyer can assign the lease to third party and make profit.
Control of home: Buyer has legal control of home during lease period. It is a leverage with little liability. Buyer gains control over home without owning it.
Flexible qualification for Credit: For people who has bad credit, lease option can be a great benefit. They have time to fix their credit until they actually purchase the home. Banks or mortgage lenders don't look at buyer's credit, the only person who buyers have to deal is the owner. So the qualification is more flexible.
Buyers can make improvements on their home since they are going to be the future owner.
Buyers don't pay property taxes, insurance for the property during lease period so this can save them money even though they have control over the property.
Minimal Maintenance: Large maintenance problems or any maintenance problems that exceed a certain amount of money are delegated to the seller.
Possible appreciation: The sale price of home is locked in so if the property appreciates, the buyer gains profit. Buyer has more equity at closing.

Lease purchase option seller's benefits

Set selling price: The price of home is locked in, so even if real estate market depreciates, the seller is still selling a home at agreed price. Seller can actually sell for higher price than usual since he is offering a term of financing. There are many people who want to lease purchase option.
No landlording: Having a tenant can be a nightmare! But having lease purchase buyer, there is no more landlording problem. These people actually want to buy this house so they take care of the place like their own. They pay monthly payment on time not to lose option deposit. They may make improvements to their home since they are going to be the future owner.
Little risk: When the buyer fails to pay monthly payments or decides not to buy the house, the seller keeps the option deposit. So seller still benefits.
Cash flow: Seller can charge little bit higher monthly payment than rent since they are providing financing and the portion of the payment goes to the principal of the loan. With higher rent payments, seller has some positive cash flow.
Tax advantage: Seller is still the owner until buyer decides to purchase. So tax benefit can go to the seller.
No realty commission: Since there is no real estate agent or broker involved, seller saves real estate commissions.
No vacancies: There is high demand for lease option purchase. There are many people who can't get financing from mortgage lenders. Lease purchase option is one of the fastest way to find the buyer.

It is not common to find lease purchase option deals. They are often created. It is all about giving solution to people's problem. Both seller and buyer can have problem they need to be resolved. There are many people who can't get conventional way to finance their home and there are many people whose house hasn't sold for a while and needs to sell house. If investor can offer a solution to their problem, he has found the deal.

Investors can also profit by sub-lease purchase option. For example, let's say that investor signed the lease option contract for 2 years at $70,000. He paid option deposit for $3,000 and monthly payment of $800. $200 of monthly payment will go to payment of principal. Now, he assigns the contract to another person. Here, it is also for 2 years at $75,000. The new buyer pays $4,000 for option deposit and $850 for monthly payment and $200 will go to principal. Now, the investor made $50 profit monthly for 2years, $1000 on option deposit and $5,000 when the buyer practice option to purchase.

Want To Learn More About Lease Purchase?

Learn How to Buy, Sell or Invest in Real Estate Safer and Easier with the Lease Purchase Contract - No Lender on Earth would Ever Dare to Offer the Same Benefits as the Lease Purchase!

Read Books on Lease Purchase

Learn from Lease Purchase Coach & Mentor .

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		Lease purchase or lease purchase option is a contract between buyer and seller which is a form of financing for purchasing a home. Buyer leases the property for a certain period of time then agrees to purchase the home at the end of the lease at a set price. The buyer puts down option deposit which will later will be added to purchase price. Buyer also pays monthly payments like rent which some portion of it, will go to pay principal of the mortgage of the home. Then after lease agreement is over, the buyer has option to buy the property. If the buyer decides not to buy the property or doesn't pay monthly payment, the seller keeps the option deposit and the lease option agreement is no longer in effect. If the buyer pays monthly payment on time and decides to purchase the home at the end of the lease, the buyer purchase home with some equity already in it. The set price buyer agrees to purchase, includes her option deposit and also portion of monthly payment paid during lease period. This is truly win win situation of real estate deals for both buyer and seller. This is a great way to purchase home for a buyer who is not qualifying mortgage or doesn't have enough money to put as a down payment. Also, it is a great way to sell a home when the demand for home is low or want to make profit tenant-nightmare free. This is also a great for investor who wants to sub-lease option purchase. Investor has the control over property without using much money. Let's look at some benefits. Lease purchase option buyer's benefits Little money up front: Unlike mortgage, buyers need option deposit which is much lower than down payment. Option deposit will go to purchasing the home at the end of the lease. Equity growth: Some portion of monthly payment goes to pay principal of mortgage. It is much better than rent, buyer actually saves money and grow equity. It is better than mortgage because you need little money to purchase home and equity growth is faster. Usually at the end of the lease, the buyer needs little or no need for down payment since there is already equity saved in the property. Little or no down payment at the end of closing: Buyer has already established credit paying monthly payment and has equity in home so often there is no or little down payment required at closing. Assign of lease: Buyer can assign the lease to third party and make profit. Control of home: Buyer has legal control of home during lease period. It is a leverage with little liability. Buyer gains control over home without owning it. Flexible qualification for Credit: For people who has bad credit, lease option can be a great benefit. They have time to fix their credit until they actually purchase the home. Banks or mortgage lenders don't look at buyer's credit, the only person who buyers have to deal is the owner. So the qualification is more flexible. Buyers can make improvements on their home since they are going to be the future owner. Buyers don't pay property taxes, insurance for the property during lease period so this can save them money even though they have control over the property. Minimal Maintenance: Large maintenance problems or any maintenance problems that exceed a certain amount of money are delegated to the seller. Possible appreciation: The sale price of home is locked in so if the property appreciates, the buyer gains profit. Buyer has more equity at closing. Lease purchase option seller's benefits Set selling price: The price of home is locked in, so even if real estate market depreciates, the seller is still selling a home at agreed price. Seller can actually sell for higher price than usual since he is offering a term of financing. There are many people who want to lease purchase option. No landlording: Having a tenant can be a nightmare! But having lease purchase buyer, there is no more landlording problem. These people actually want to buy this house so they take care of the place like their own. They pay monthly payment on time not to lose option deposit. They may make improvements to their home since they are going to be the future owner. Little risk: When the buyer fails to pay monthly payments or decides not to buy the house, the seller keeps the option deposit. So seller still benefits. Cash flow: Seller can charge little bit higher monthly payment than rent since they are providing financing and the portion of the payment goes to the principal of the loan. With higher rent payments, seller has some positive cash flow. Tax advantage: Seller is still the owner until buyer decides to purchase. So tax benefit can go to the seller. No realty commission: Since there is no real estate agent or broker involved, seller saves real estate commissions. No vacancies: There is high demand for lease option purchase. There are many people who can't get financing from mortgage lenders. Lease purchase option is one of the fastest way to find the buyer. It is not common to find lease purchase option deals. They are often created. It is all about giving solution to people's problem. Both seller and buyer can have problem they need to be resolved. There are many people who can't get conventional way to finance their home and there are many people whose house hasn't sold for a while and needs to sell house. If investor can offer a solution to their problem, he has found the deal. Investors can also profit by sub-lease purchase option. For example, let's say that investor signed the lease option contract for 2 years at $70,000. He paid option deposit for $3,000 and monthly payment of $800. $200 of monthly payment will go to payment of principal. Now, he assigns the contract to another person. Here, it is also for 2 years at $75,000. The new buyer pays $4,000 for option deposit and $850 for monthly payment and $200 will go to principal. Now, the investor made $50 profit monthly for 2years, $1000 on option deposit and $5,000 when the buyer practice option to purchase. Want To Learn More About Lease Purchase? Learn How to Buy, Sell or Invest in Real Estate Safer and Easier with the Lease Purchase Contract - No Lender on Earth would Ever Dare to Offer the Same Benefits as the Lease Purchase! Read Books on Lease Purchase Learn from Lease Purchase Coach & Mentor .
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