If you don’t have a large chunk of cash to
make a down
payment, especially if this is your first investment
property, a lease option can help you get into the game
very quickly.
The way a lease option works is that you negotiate with
owner for the right to rent the property with the option
to buy it at a future date for a specified price.
If you choose not to purchase the property, for whatever
reason, you’re not obligated to do so. According to the
terms of the lease, however; the owner will be obliged
and required to sell you the property for the agreed upon
price, should you decide to exercise that option and right.
The beauty of the lease option is that it allows you to
get it on a property very quickly; because you don’t have
to make a down payment and you’ll only be responsible for
whatever monthly lease amount you negotiate with the owner.
During the time frame that you lease the property, you can
use the funds you do have to renovate the property and
locate someone to purchase the property at a higher selling
price after it’s renovated. A word of caution here, however.
When you negotiate with the current homeowner and sign the lease, it’s imperative that you insure the lease contain
a “Full Right of Assignment” clause.
Without this clause you won’t be able to do anything to the
property, including locating a new buyer, without his or her
approval.
Another few tips about the lease option. While you won’t
have to make a down payment, you will typically need to
pay the existing homeowner an option fee. This is generally
nowhere near as expensive as a down payment and is usually
about a hundred bucks or less.
This is a compensation fee of sorts for the homeowner
agreeing to sit on the property, more or less, and sell it
to you should you decide to buy it.
In essence, you’re paying the homeowner for time. The lease
option must also contain the price you and the homeowner
have agreed upon, should you decide to purchase the property.
Finally, most lease option contracts contain an expiration
date. This means that you will have up until the stated
expiration date to either purchase the home or walk away.
Remember, you’re not obligated to purchase the home within
that timeframe, but if you don’t and the expiration date
passes, the homeowner is no longer obligated to sell the
property to you for the agreed upon price.
When a lease option is carefully negotiated, it gives you
the full legal right to make renovations on a fixer upper
property, find a new buyer and sell the property; even
though you were never on the title.
This is a very good way to make several thousands dollars
pure profit and the only money you will be out are the
renovation costs, option fee, and whatever you paid in
rent for the duration you leased the property.
Sal Vannutini is a successful real estate investor and
author of the best selling "Fixer-Upper Fortunes".
Free e-book and 6 Part mini-course reveals how to make a
fortune in real estate.
Visit:
http://www.fastfixerupperprofits.com
