Investing with Lease Options
|by J.P. Vaughan|
Low risk real estate investing using lease options
When it comes to marrying real estate investing with the ability to help people, nothing matches the strategy of using lease options. Lease options allow you to make money through real estate investing while helping people achieve the dream of home ownership.
Understanding the benefits of lease options
A real estate "option" is the right to buy a property at a specific price within a specified period of time. But even though you have the right to buy, you do not have an obligation to buy the property if you chose not to exercise your option. A "lease option" couples a real estate "option" with a "lease" on the property.
With a lease option, a tenant is placed in a position to ultimately own the property they are renting. The tenant makes a non-refundable deposit (called "option consideration") for the right to ultimately buy the home. The lease option tenant also makes monthly rental payments and handles minor maintenance.
Lots of cash but bad credit
When home buyers have bad credit but do have enough money for a down payment, they are perfect candidates for a lease option. They can't qualify for a new loan at the moment, but as long as the option term is two to three years, they have the time they need to clean up their credit and qualify for long-term financing.
So a lease option helps these home buyers by giving them an avenue into the real estate market and provides you with cash up front from the option consideration, monthly cash flow from the rental income, and a large chunk of cash when your lease option tenant exercises the option to buy.
If the buyer cannot exercise the option to buy in the specified time, you still keep the option consideration and monthly payments, and find another lease-option tenant.
More lease option resources
We've compiled a vast array of lease option real estate resources. Just select "Lease Options" from the drop-down menu on these pages: How-to Articles, Money-Making Ideas, and real-life Success Stories.
And if you're ready to get started now and want to speed up your success, be sure to check out this excellent home study course: Lease Option Success Strategies.