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The Lease Purchase contract is the quickest,
easiest and least expensive way to buy, sell or invest in real
estate. It replaces the typical adversarial relationship that
usually exists between buyers and sellers with a win-win method of
transferring real estate ownership. As a result, it is highly
sought after by those who know about its powerful features and
benefits.
Tenant/Buyer Benefits of a Rent to Own
Transaction
If you are in the market to buy a home, you are
probably aware of the advantages home ownership provides (tax
shelter, appreciation, security, etc). If you are actively seeking
homes for sale on a Lease Purchase agreement, you either
- cannot purchase a home through conventional
means,
- are not ready to make a commitment,
- are a real estate investor,
- are very smart or
- a combination of the above.
The Lease Purchase contract provides you with
many features and benefits, but perhaps the most powerful one is
the rate at which you accumulate equity. Compare any lender's loan
amortization schedule to that of a Lease Purchase contract and
you'll quickly see that the Lease Purchase contract wins
hands-down -- every time. Moreover, the buying power of a
Lease Purchase contract can quickly and easily land you a home
that you would never qualify for the conventional way.
Here are some features and benefits for the
tenant/buyer:
- Faster Equity Growth: Equity
accumulates much faster (five times or more!) than
with conventional financing through a bank or lender.
- Rent Money is Working Toward the
Purchase of the Home: Every month a portion of
your rent payment (typically $500-$1,000, depending on
the home) is credited towards your down payment or off
of the sales price.
- Option Consideration is Credited
Towards the Purchase of the Home: When you sign a
Lease Purchase contract, you will pay the seller an
option deposit. This money is your vested interest in
the home and will be fully (100%) credited to you when
you buy the home.
- Minimum Cash Out of Pocket:
When you purchase a home conventionally, you must pay
between 5% to 20% down plus closing costs and prepaids. When
you buy with a Lease Purchase, you typically pay 3%
down plus first
month's rent and a small security deposit. This will
save you between 40% and 85% every time you buy a
home.
- Frequently No Down Payment at
Closing: Since you have given the seller an option
deposit and you have been receiving monthly rent
credits, there will frequently be very little or
nothing left to pay for a down payment at closing.
Many lenders consider a lease option of one year or
more as a refinance loan rather than a purchase money
loan, therefore they base their loan amount on the
appraised value rather than on the purchase price.
This can be significant if the appreciation rate in
your area has been high. e.g. You could get cash
back when you finance the property.
- Profits from Appreciation:
Since the sales price is locked in before closing (as
specified in your agreement), any increase in property
value will mean that your equity (what you owe minus
what it's worth) is increasing in the home .
- Possible Assignment (Sale) of
Contract for a Profit: If you are allowed to
assign your option (it will be in your agreement), you
may assign it (sell it) to a third party for a profit.
- Credit Problems are Okay:
Qualification restrictions simply do not exist. You
will be approved at the sole discretion of the seller.
- No Lengthy Escrows or Loan Approvals: Your approval will be based solely at
the discretion of the seller instead of a lender who
can take up to a month (or longer) to render a
decision.
- Control of the Home: You will
be put in full legal control of the home for a
specified period of time without actually having to
own it.
- No Taxes, Less Liability:
Since you do not own the home (yet), you will not have
to pay property taxes and your liability exposure will
be dramatically reduced.
- Quick Move In Time: You can
typically take possession of the home in less than one
week instead of conventional move in times of one to
three months after your offer was accepted.
- Maximum Leverage: You are
spending very little money to control a very
expensive, and very profitable, piece of real estate.
- Time: Before you actually buy
the home, you will have 6-36 months (depending on your
agreement) to repair your credit, find the best
interest rates, investigate the home and research the
neighborhood and/or schools.
- Minimal Maintenance: Large
maintenance problems or any maintenance problems that
exceed a certain amount of money are delegated to the
seller.
- Privacy: Your name will not be
on the deed until you exercise your option to buy.
- Peace of Mind: You will have
full control of the home and can maintain it or
improve it however you wish.
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Investor Benefits
As an investor, you are probably aware of the
principles of leverage (the use of borrowed funds to improve one's
capacity and to increase the rate of return on an investment).
With the Lease Purchase contract, you can buy (control) properties
for very little money down without using a lender or going
through the loan application process.
Additionally, the Lease
Purchase contract is so quick and easy to use, you can
significantly increase your productivity and, as a result, your
cash flow. You will receive the same features and benefits as the
landlord/seller or the tenant/buyer, depending on which role you
take in the transaction.
What kind of people do we work with?
We work with people who are serious about
wanting to buy and own a house. We want people who will have pride of
ownership and be good neighbors. We look for people who have a reliable
job and income, financially responsible, and have a good tenant history.
Having decent credit is preferred but not required. We look at every
family on a case-by-case basis.
What qualifications do we look for?
We generally have easy qualifications for our
applicants. The two most important things we look for are:
whether you are currently employed at a job in good standing and
have a good tenant history. We understand that you may have
experienced foreclosure, repossessions, bankruptcy, overdue
medical bills, or other credit challenges in your past. Good
news! We not only understand those challenges but we also
believe in giving people second chances! If you have the
necessary upfront money and are gainfully employed with a good
tenant history, we believe you will be a strong candidate for
our Rent to Own Homes.
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