Lease purchase options, or rent-to-own
homes, are a great source of income for the
creative real estate investor who wishes
to make money while helping those who can’t
get into a home with their own credit to
realize their dreams of owning a home. Lease
purchase options work much like a leasing a
vehicle, only on larger terms. It benefits
the tenant buyer who cannot obtain a
mortgage to purchase the home by offering
them the opportunity to build their credit
and make the choice to purchase later while
also assisting the investor by maintaining
an additional source of income for the
duration of the lease period.
When a car is leased, there is a
nonrefundable deposit paid to the dealership
that equals a percentage of the car’s value.
This is also done in a lease purchase
or rent-to-own agreement and is
referred to as the Nonrefundable Option
Payment, securing the tenant buyer’s ability
to choose whether or not to purchase the
home at the end of the lease contract
agreement. As with a vehicle, there is a
lease contract signed in which the tenant
buyer agrees to make a payment of a certain
amount each month for a predetermined length
of time – usually 12-36 months. This can be
done in a manner that includes payments to
be credited toward the purchase of the house
or not, depending on how you want to set up
the lease.
Finally, at the end of a car lease, the
driver has the option to finance the
remainder of the “balloon payment” owed on
the vehicle in order to purchase it or to
turn it back over to the dealership. In real
estate, when working with a rent-to-own or
lease option contract, this is referred to
as the Option to Purchase contract, in which
the tenant is given exclusive rights to
purchase the real estate property without
you offering it to the highest bidder first
without obligating them to purchase when the
lease is up.
If the standard rental contract was signed
so that the payments made during the lease
period were credited toward the purchase of
the home, the tenant buyer will need to
obtain a mortgage loan equivalent to the
remainder of the purchase price originally
agreed upon. If there were no rental
credits, the tenant buyer will need to
obtain the entire purchase amount.
Lease purchase options and rent-to-own
housing are excellent ways for a
real estate investor to make a lot of money
because there are three different sources of
money coming in, all of which add up to a
sum greater than the original investment by
far. You put little money into the purchase,
and in exchange you receive an up front
payment, monthly installments, and finally a
purchase payment equal to an amount greater
than you paid.
ABOUT THE AUTHOR:
Charles
W. Moore is a U.S. Army Veteran who began
investing in Real Estate in 2001. He's a
Full-Time Investor, Webmaster, Speaker, and
Author of the book, "Million Dollar Rent To
Own Real Estate Secrets Exposed." Get a Free
Report on
Rent To Own Real Estate Investing from
Charles at:
http://www.Rent2OwnExposed.com and learn
more about Real Estate Investing, Investing
in Stocks and Internet Marketing by
visiting:
http://www.REIeBooks.com
