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Real Estate Rent to Own and Lease Options


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Rent to Own / Lease Purchase Part # 1 of 2

Rent to Own / Lease Purchase with Option. These are basically the same, usually the Rent to Own is the Buyers and the Lease Purchase is the Sellers. We are mainly dealing here with very motivated Sellers (must sell or else) with hard to sell properties and Buyers (bruised and damaged credit) that are hard to finance and are motivated to buy a new home for their family.

It is not recommended to do a lease purchase with a Seller in foreclosure unless you know what you are doing, can get it completed in a very short time frame and are able to get the Buyers financed quickly, if do NOT attempt it. There is usually not enough time under normal circumstances.

The intention in dealing with the Seller(s) is to be able to lease the property for one to five years and have the ability within that period of time to also have the Option to Purchase the subject property for a preset price within the same periods. Suggested to do a home inspection and a title search first and make sure that all is okay upfront and prevent it from falling apart later before the purchase and sale can be finalized, don't want to spoil your payday.

Best also to secure a home warranty (usually about $400 with $75 deductible, great major insurance coverage when everyone has shallow pockets) with the Buyer paying for small repairs up to $75 and also the deductible for the warranty that would cover any major items that may occur and will save a lot of grief later.

The monthly rent paid to the Seller needs to be of reasonable market amount or less. Some Sellers have refinanced to payoff credit cards and other non-related items and have monthly payments and loans way too high. Sometimes the Sellers may have to subsidize the monthly payment and even contribute towards the selling price if it's too high.

Remember that you are trying to gain a small margin differential of the monthly income and also a reasonable differential on the sale and purchase amounts. If the monthly payment to the Seller is slightly higher than you are getting from the Buyer but the sales price is fair or great, maybe the Seller can give you rent credits against the sales price (can range from $100 monthly to full payments) and you can cover the Seller cash flow now?

Now as for your Buyer, it is imperative to run a credit check first to see if within the next 12 months what are the chances of getting the Buyer financed and also to see what kind of history they may have in paying their bills on time. Everyone is friendly and nice until they have to pay you. No sense in having to do an eviction right away while also paying rent to the Seller (big monthly drain). If the Buyers do not check out, do yourself a favor and walk away from the deal before it gets ugly.

To learn more about the amazing profits of rent to own and lease purchase, please visit our website or contact us for more in depth information. Have questions. . . please contact us.

James Clinton is a renowned national expert and guru mastering in real estate investing and creative real estate solutions. James is also a national award winning builder, remodeler and developer with over forty years of successful business operations. Married and a father of two grown daughters and two cats.

James has authored several books and has created, written and implemented many proprietary forms, agreements and exclusive paperwork for all his business ventures. An author, writer, reader, teacher, developer, trainer and lecturer complimented with a very expansive and extensive collection of true and real life experiences.


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