Lease Option Investing In Today's Real Estate Market

Lease Option Investing is one of the least understood of all the real estate tools available today. Lease Options, or sometimes referred to as Lease Purchases, and even Rent to Own, can remove the adversarial relationship that can exist between a buyer and a seller of real property.

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Lease Option Investing has been known to produce greater profits for both the buyer and the seller. The seller has a buyer for a fixed future price. In this down market this can be a profitable way to sell your home, if you need to move right away. The buyer will agree to buy your home at a pre-agreed upon asking price at a pre-agreed upon time.

The seller will also collect a down payment for this agreement. Additionally, the seller traditionally collects a sum above the monthly lease amount, which is normally treated as additional down payment money. With these funds as security, the seller can reasonably feel assured that the buyer will follow through with the purchase as agreed and will maintain the home as if it was already theirs.

And the benefits for the buyer are just as numerous. The fixed price that is negotiated will assure the buyer against future market inflation, and rising prices (and they will rise again!). The initial down payment is traditionally lower than a mortgage lender would require, so the buyer will be able to afford more house at the present time, then if they were to close escrow immediately.

Buying a home with lease option investing will circumvent the buyer from obtaining a new loan right now. This will save loan origination costs, which can be applied to a down payment, and qualifying for a new loan right now. Even if the monthly lease payment is more than the traditional rent for similar housing, these additional funds act as a forced savings account towards the purchase of their home.

Lease Option Investing is not get-rich-quick nonsense. It takes a fair amount of due diligence and research on both parties part. A rent to own scenario works well for the buyer when:

• The buyer finds a neighborhood that he would like to live in for at least the next five years.
• The buyer has a desire to purchase a home, but needs time to gather the necessary down payment.
• They need the security of a fixed housing price, as well as a fixed future purchase price.

Lease Purchase for the seller is an appealing option when:

• The seller needs to sell now, but wants to wait for the market to recover to get a better price.
• The seller needs a higher monthly payment from the tenant than the current housing market dictates.
• Security in knowing the home will be well taken care of because the tenant has substantial funds invested in the property towards the future sale.