Selling Real Estate Through Lease Options By Bryan Benson At Isnare.com Ezine Articles

It can be difficult to make money in real estate as an investor if you expect every individual who comes to you to purchase to have the same sets of qualifications as a bank or builder would require. However, you can target a larger percentage of the buying community by selling your properties with lease options.

If you’ve been properly trained as a real estate investor and have ventured into the area, you should be aware by now that the majority of your buyers are not going to come to you with readily available financing and are looking for alternatives to traditional mortgage loans. Unfortunately, most so-called real estate investors have not taken the time to prepare and receive training in the field and expect all potential buyers to arrive with down payments, golden credit, and a mortgage lender ready to supply funding.

Only a small portion of buyers qualifies for traditional lending opportunities, and most are looking to fulfill the American dream and become a homeowner through some alternative method. As a savvy investor, you can offer this to a number of individuals who may be looking for your help in the matter with something called a lease purchase option. This type of funding allows potential buyers a bit of relief in terms of providing down payments and credit in order to obtain a home.

Here’s how it works. A buyer comes to you with bad or no credit but has a sum of money. The buyer can also maintain payments on the home for an undetermined period of time. You take the sum of money available and apply it to a “down payment” toward the purchase of the real estate in question. Then, you sign an agreement with your new tenant that is similar to a lease but also helps the individual build equity toward the home. Once the tenant has cleaned up his or her credit history, they can obtain a traditional mortgage loan and purchase the real estate from you or work out a seller financing agreement with you.

This benefits both of you, since you are accruing profit from the payments but also allowing another individual who has no other recourse the opportunity to fulfill a dream, become a homeowner, and build some equity into the real estate property. You’ve managed to accomplish the maintenance of income, sell your property, and assist someone in making a purchase. The tenant buyer should also be responsible for 100% of all repair costs as a condition of their option to purchase.

Another great thing about lease purchase options is that you make more off the deal. You can increase the price of the real estate and still find a buyer, and because you are retaining a portion of the payments each month for your own income, you are making an additional profit based on the buyer’s need to finance the home in a non-traditional fashion. Either way, the use of a lease purchase option is a win-win situation for all involved, getting you out of a property at an excellent profit margin while getting an aspiring homeowner into it.

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