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REAL ESTATE SECRET - [ Lease to Own ]
By Claude W. Diamond J.D.
DON’T EVER BUY.........RENT!!!!!
Such blasphemy! What kind of successful investor would advise anyone to
rent instead of becoming an owner?
The answer: a smart one!
What if I showed you a way to profit in real estate without large cash deposits;
not having to apply for bank loans, no overhead, no maintenance, no taxes,
insurance or home owner fees to pay. You would probably say that that type
of investment does not exist or that such an idea is the product of the
author's wild imagination.
Well, it's time to learn about the best kept secret in real estate: it's
called Lease Purchasing, known also as 'renting to own' or 'leasing with
an option' and 'lease to own'.
Anyone can control real estate that generates immediate positive cash flow
without having to become a real estate expert or by having to look at hundreds
of houses. If you know how to rent, then you can put together all kinds
of profitable cash generating transactions with just a telephone. Lease
to Own allows you to create small and large deals without going to the bank.
Why Lease to Own?
Controlling real estate through Lease Purchasing, whether it’s for
your own home or as an investment property, is by far the superior method
of finance. Lease Purchasing helps to remove the traditional adversarial
relationships that exist between buyer and seller and produces greater profits.
In most real estate transactions there is a natural tendency between the
buyer and seller to try and beat each other up. One wants a lower price
and the other wants a higher one. Not to mention all of the other items
that have to be negotiated. Next come all of the difficulties associated
with deposits, qualification, appraisals, title companies, lenders, escrows,
lawyers, etc., etc. Lease Purchasing eliminates these problems and lets
the buyer and seller have a win-win experience and get the deal done.
'Lease to Own' is a process where a rental agreement is combined with a
purchase or more specifically, an option contract. Price, length of contract,
escrow instructions, rent credit and other pertinent terms are all negotiated
in advance. The tenant/buyer has a percentage of his rent credited to the
down payment or off the price. In many cases, more money is being applied
monthly, than an actual mortgage payment would be to the principle.
All the parties concerned can benefit by doing a Lease to own transaction.
Let's examine the advantages for the buyer, seller and investor. From the
Buyer's Viewpoint:
Generally, this is a renter who can't purchase a home through conventional
means. This buyer does not have a large enough down payment for a bank loan,
minor credit problems, a new job, high loan to debt ratio or other reasons
that make a traditional purchase of a home impractical (impossible) at this
time. The buyer is aware of the advantages of home ownership (tax shelter,
appreciation, security, etc.) and is eager for a chance to get involved
in a home of his own and get out of the rental rat race. Our buyer can lock
in the future purchase price even though ownership may not transfer for
a year or more. A percentage of the rent can be credited toward the downpayment
or off the price. During the terms of the contract, the tenant/buyer has
time to check out the house, neighborhood and to obtain the best financing.
From the Seller's Perspective:
If you are a seller and the market demand is very low for your property,
the best way to get your full asking price would be to 'Lease to Own' your
home. Since you are being flexible on your terms you are entitled to get
your full asking price and a higher than average or premium rent for your
property.
When you find a prospective buyer/tenant you normally receive 'option consideration'.
This is a nonrefundable amount, that in many cases, can be several months
rent. If and when the buyer wishes to utilize her option, then you will
hopefully receive your capital profits when escrow closes. If the buyer,
however, allows the option to expire you also win since you can begin the
whole process all over again and either renegotiate the contract or find
a new tenant. In either case, you receive more option consideration for
the same property. If the property sells, then you use some of your profits
to reinvest in another house. The potential for profit for the seller is
fantastic since a well negotiated deal will always reap profits at every
stage of the Lease Purchase.
From the Investor's Viewpoint:
The Lease Purchase has everything an investor needs to make prudent, profitable
investments in real estate. Utilizing very small down payments (1-2%), an
investor can control properties that normally require 10-30% down without
utilizing a lender nor going through the loan application circus.
A good lease to own deal can generate profits three different ways:
1. Cash upfront with option consideration
2. Cash monthly (rent)
3. Cash at the close (or a first class note)
Other strategies involve the assigning or flipping of the optioned property
to a third party or just being a consultant for the buyer and seller and
retaining a portion of the option consideration.
In summary, controlling properties by renting with an option (Lease Purchasing)
is the absolutely best way to be involved in controlling homes and obtaining
great cash flow, high profits and minimum risk. Lease Purchasing can be
the best way to create quick cash flow for the first time homeowner or the
seasoned investor.
Claude W. Diamond J.D. is CEO and founder of the Diamond Consulting Group
which is based in Chula Vista CA. If you would like a free report on Lease
Purchasing and its benefits, you may call 1-800-324-4652. If you wish to
speak to Mr. Diamond directly, his number is (619)-421-4121. |