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Last Updated: May 14th, 2012 - 22:24:01 |
To buy their first investment property some have used Lease Purchase. Why?
When tracking leads, many have acquired a real estate franchise to write up a Lease Purchase, often called a "Rent to Own," agreement. This permits you to occupy and rent that home while having an agreement stipulating a later purchase of the investment property.
A real estate lawyer should be used because lease purchase agreements vary. There is no standard contract used nationwide. Many lease to own investment homes are available now and vacant. Moving into one may take only three to five days.
The set amount and predetermined time to buy your investment home are usually stated in the two documents: a purchase contract and a rental or lease agreement. Beware. A few “Rent to Owns,” rent the property without signing any lease. That for you, would be foolish because then contract changes or evictions would be hard to disprove or counter.
Terms usually inspected by your real estate lawyer in the Purchase Agreement, include buyer's inspection rights, the seller's disclosure obligations, closing costs, personal property included or excluded, and any penalties for non-compliance with the contract.
One of the biggest benefits that you, an investment properties renter, have when signing a Lease Purchase is the time you have. While waiting this benefits you in many ways.
First off, if you are experiencing credit problems or debt consolidation, you now have occasion to repair your credit score before you purchase.
Secondly, while leasing your real estate investment, you remain debt free with no taxes or home insurance to pay. Major repairs are usually the owner's responsibility.
In Addition, your waiting for that investment property purchase allows you ample time to check the faults and features of the house, the neighborhood, churches, temples, synagogues, schools, nearby shopping, recreation, health care facilities, and even the neighbor next door
Moreover, by the time you purchase that investment real estate, the value of your investment home’s price could have appreciated beyond that locked-in price by home improvements or just locality appreciation. This gives you additional equity for future resale profits. In the meantime, the seller cannot sell the house to anyone else.
Also a refinance mortgage as “owner financed’ may be bargained for, because after this rental time the seller now knows you and trusts you. “Owner financed,” simply means that a seller is willing to help their buyer by financing all or a part of the sale price. Usually, in this case, the buyer put up the down payment and their seller will hold a first home equity loan or a second mortgage. You may want to pay them a fee to entice them to help you in this way.
If you can get the seller to use that refinanced home loan, your investment property purchase will require only that small fee.
With your lease purchase, you omit paying traditional down payment, closing costs and other home inspection fees found in the conventional home mortgage.
Finally, once you have bought that first investment home through a Lease Purchase, you will have instant credit to buy any future homes.
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