Advantages And Disadvantages Of Lease Option Real Estate Investing

Lease option real estate investing is a creative way to get started in real estate investing. The biggest advantage of this investing method is “control”. It basically gives the investor the right to possess be in control of and profit from a property without owning it.

A lease option contract is a combination of two documents. The lease part is where the owner agrees to let you lease their property while you pay them rent for a stated period of time. During the lease period the owner can not raise the rent, rent it to anyone else, or sell the property to anyone else.

The option part represents the right you purchased to buy the property in the future for a specific price. If you decide to exercise your option to buy, the owner has to sell it to you at the negotiated price. The option part of the contract obligates the seller to sell to you during the option period- but it does not obligate you to buy. You are only obligated to make rental payments as agreed during the lease period.

When the lease option contract is written and structured properly, it can provide tremendous benefits and advantages to the investor. If the lease option includes the “right to sub-lease” the investor can generate a positive cash flow by renting the property to a tenant for the duration of his lease, or lease option the property to a tenant-buyer for positive cash flow and future profits. If the lease option includes a “right of assignment” the investor could assign the contract to another buyer for a quick profit.

Lease option real estate investing, is a flexible, low risk, highly leveraged method of investing that can be implemented with little to no money.

High Leverage

It is highly leveraged because you are able to gain control of a property and profit from it now–even though you don’t own it yet. The fact that you don’t own it also limits your personal responsibility and liability. Only if you decide to purchase the property by exercising your “option to buy” would you take title to the property.

Little to no money

The investor’s cost to implement a lease option agreement with the owner requires little to no money out of pocket money because it is entirely negotiable between investor and owner. There are a variety of ways the option fee can be structured such as an installment plan, balloon payment or other agreeable arrangement between both parties. The option fee can even be as little as $1.00. In order to secure the property for purchase at a later date, tenant-buyers typically pay a non-refundable option fee of approximately 2%-5% of the negotiated purchase to the seller. Depending on how the lease option agreement is written and structured, the investor could possibly use the tenant-buyer’s option fee money to pay any option fee owed to the owner.

Flexible

It is a flexible method of real estate investing because terms of the agreement like payment amounts, payment dates, installments, interest rate, interest only payment, balloon payments, purchase price and other terms are all negotiated between seller and buyer. Responsibilities of both parties are also negotiable. For instance, if the investor doesn’t want to act in the capacity of a landlord, he could specify in the lease option agreement that tenant-buyer will be responsible for all minor maintenance and repairs and the original seller will remain responsible for any major repairs.

Financially Low Risk

It is low risk financially. If the property fails to go up enough in value to make a profit, you have the purchased the right to change your mind and let the “option to buy” expire. Even if your tenant-buyer decides not to buy the property, you have profited by a positive monthly cash flow from the tenant-buyer’s rent payments and upfront non-refundable option fee.

Let’s look at an example of a lease with option to buy structured in a way that the investor profits in 3 separate phases of the investment.

Profit #1 non-refundable option fee

Future sales price negotiated with the current owner is $125,000 with an option fee of 2% of the sales price. Option Fee you owe the owner is $2,500. The future sales price you set for your tenant-buyer is $155,000 and the option fee is 4% of the sales price. Option fee the tenant-buyer owes you is $6,200. You collect $6,200 from tenant-buyer and pay $2,500 to the owner and your profit = $3,700

Profit #2 cash flow from monthly rental payments

The Monthly rental payment you negotiated with the owner is $1,000. You set the monthly payment at $1,250 per month for your tenant-buyer. Each month you collect $1,250 from your tenant-buyer and pay the owner $1,000 each month. Your profit is $250 monthly positive cash flow during the lease period.

Profit #3 is set up when the lease option contract is initially written

The difference in the negotiated future purchase price with the owner and the future purchase price set for your tenant-buyer. Let’s say the property goes up in value to appraise for at least $155,000. Your tenant-buyer decides to exercise their option to buy. You buy the property from the owner at $125,000 and then sell it to your tenant-buyer for $155,000. $155,000 – the $125,000 you pay to the owner = $30,000 profit.

Of course the key to making lease option real estate investing work, is finding motivated sellers and buyers. Finding these motivated sellers and buyers shouldn’t be difficult. The continuing down turn in the real estate market has created a large number of sellers who can’t sell their property and also buyers who can’t get financing to buy. The seller could possibly get a fair offer to be paid in the future by selling their property to a real estate investor on a lease option basis. A potential tenant-buyer could obtain home ownership without having to qualify through traditional home loan guidelines.

One disadvantage of lease option real estate investing involves the tenant or tenant-buyer possibly defaulting on monthly rental payments. This would make it necessary for the investor to come up with money out of pocket to pay the owner and possibly have to proceed with eviction process. However, there are certain provisions and clauses that can be written into the lease option to deter buyers from defaulting on payments.

If the investor fails to do “due diligence” before entering into a lease option agreement, he could end up with a property that is unmarketable. There could be a number of liens on it, issues involving ownership of the property or it might be in foreclosure. By diligently performing research before entering into a lease option agreement, the investor can avoid these mistakes. A few things the investor could do is– perform background and credit checks on both the seller and buyer, search public records in reference to ownership and property status, or do a title search.

Despite the few disadvantages, lease option real estate investing continues to be an excellent way to invest in real estate with little to no money and low financial risks. It also remains to be an excellent way to gain control of a property you don’t own and create positive cash flow and profits on flexible terms.

Bottom line, the secret to success in today’s challenging real estate investing market is to use only the best creative ideas, proven tools and strategies that have been successfully used by other investors to generate cash flow and profit from today’s real estate market. The more you understand and apply now, the more you will profit from today’s financial crisis.

Chennai Real Estate, Buy Or Wait

Chennai is no different from the entire country, is what most of the people believe at, Chennai Real Estate also has seen no upsurge in prices in the past few months. Input costs in the real estate and construction industry have gone up tremendously.

Construction companies have to increasingly look out for land in the sub urban areas to suffice the demand existing in the market. But the major hitch in Chennai is infrastructure to support the growth in the sub urban market.

Due to these factors prices of Chennai Property also have gone up, but due to the increasing input costs in construction industry like Iron, Cement, Sand, Brick, basically due to the high cost of fuel and high inflation, apartment prices have to either further go up or prices of land have to come down.

Analysts predicted a price correction in the Chennai Real Estate market but prices have remained stable for apartments and villas, the only way for prices of land to go down is to move further away from the city, the only option for developers right now looks to be to develop integrated townships where work places and residences can be developed simultaneously, the concept of living inside the city to work might just change over the next few years.

Builders feel Chennai Property market is set for a price surge again after the political instability settles, but would not be in the magnitudes that happened before, there would be a phased controlled price rise majorly due to construction costs going up.

I personally feel, it is time to buy what you really like, negotiate with the construction company and you might get amazing prices! So go start shopping today.

Things To Avoid When Buying Real Estate

When investing in real estate when buying properties there are some things you should avoid. One thing you should avoid when buying real estate is property that the taxes are not up to date. The reason for this is if the taxes are not paid the government can take a way the property. The last thing you want is to invest some time and money and end up not being able to buy or even worst lose a property. It is recommended that you get the information about the taxes before you buy a property.

Another thing you should avoid when buying real estate is properties that have over due bills like water and sewage. The reason for this is if the water and sewage are not paid the government can take away the property. If you do buy property that the bills or the taxes need to be paid, it is important that you do have the money to pay them off.

One last thing you should avoid when buying real estate is properties that are overpriced. If a property is over priced and the housing market goes down, if you do sell the property you can end up losing money. It is recommended that you buy property at or below market value. If you do buy property at or below market value you will make more money if you sell it. Buying real estate can be very profitable if done right. If you use the information you read here you will know what things to look out for.

Choosing the Right Property

If you’ve got a little cash, or even very little cash, and you’re thinking of investing it in real estate, this article is about to save you a lot of time, money, effort, and headaches. If you’re wondering how to invest in property the right way, here it is in one word: foreclosures. Here it is, in six words: tax foreclosures, after the tax sale.

If you’re thinking of landlording, building a real estate empire, retiring from your massive landlording cash flow, just forget it. Some people make it work, but too many others find themselves the owners of dumps, dealing with tenants and toilets and 3 a.m. phone calls, feeling anything other than freedom, even if they have a few bucks in the bank. To learn how to invest in property the right way, you’ve got to become familiar with the freedom of liquidity.

Liquidity is achieved by being able to ditch whatever you own for cash, hopefully on very short notice. The best way to do this when investing in property is buy only properties where the profit is built into the sale. For example, if you could get a property that was worth $20,000 for $200, you pretty much can’t lose there. No matter if you decide to keep that property and rent it out, or sell it right away to the first person that comes along, you’re unencumbered. You know that property will sell, and sell fast, if you want out.

A lot of people spend a lot of time and money fixing up rehab properties. This is a big “How To Invest In Property The Right Way” no-no. Want to invest the smart way? Buy property for so cheap that you can sell the property to rehabbers and still make $10,000-20,000 or more on the deal. When you can do that, you’re swimming with the big fish.

The best way to get these kinds of deals is to buy from tax delinquent owners – but only after their property has already been sold at tax sale. During the grace period after tax sale, you can still buy a tax delinquent property directly from the owner (and if you wish, pay the taxes and keep it, or flip it to a rehabber or other investor right away and let them take care of the taxes). These owners are the most highly motivated, as they’re about to lose everything.

You could buy a property from a tax delinquent owner for a few hundred dollars (perhaps with an agreement to share the proceeds with them 50/50 or something) – and before you’ve even gotten the deed recorded, have another buyer on the line for $10-20 thousand. Easy. You walk away from that deal out no more money than it cost you to find the owner, find a buyer, and record a deed – with a nice $10,000 profit.

Find The Best Real Estate Services Online

If you are acknowledging the choice of offering your home, it is critical to think about procuring a real estate agent. Great agents assume a critical part in giving fitting assessments of the business cost of homes.

It is paramount to abstain from picking an agent woefully on the groundwork of agent charges and requisitions in light of the fact that the most minimal expense may not compare to the best arrangement. Besides, an agent who is ready to rapidly bring down their requisition could recommend urgency.

Besides, it is a warning that they might be primed to bring down the offering cost of your property throughout contract arrangements. The most imperative explanations behind contracting an expert estate agent incorporate:

Education & experience

It is prudent to contract the services of an individual who recognizes better options in light of the fact that you remained to profit more than in the event that you took care of the employment yourself. On the off chance that you need data of economic situations in the estate business it is prudent to think about enlisting an expert. The estate agent knows the economic situations administering your purchasing or offering methodology, including the normal for every square footage expense of comparative houses, normal days available, normal deals costs, degrees of the schedule to sold costs and that’s only the tip of the iceberg.

Subsequently, an informed and accomplished estate agent will have the capacity to work in your best enthusiasm to get the best arrangements. Moreover, the right agent knows how to filter through the pile of calls, to discover potential home purchasers and incite genuine purchasers. This provides for you the perfect open door to redirect your vitality to other imperative exercises.

Price direction

Best real estate services have insider learning about your neighbourhood. They have the right business data, for example, similar deals, information on schools, demographics and wrongdoing.

They know the updates performed on a home a few squares away, its recorded cost and the real offering cost. Thusly, he/she will have the capacity to guide the procedure of settling on the evaluating choice dependent upon the supplied information. In view of the business request, supply and the property’s condition, the agent will be in a position to devise a powerful transaction system.

Professional systems administration

Estate agents frequently work with numerous different experts in the business who offer services that you may need to offer or purchase property. While mulling over the legitimate risk, an accomplished agent will have the capacity to propose a productive and skilful seller, who likewise has a notoriety of offering focused costs. They can do this by giving a schedule and foundation data of references they have worked with, keeping in mind the end goal to help you settle on an educated decision about affordable real estate .

In order to find competent real estate services, you need to search online. the online directories can provide you all the contact information about real estate agents. At these websites you can also find reviews about the real estate services and choose the best one according to your choice.

Guide To Find The Best Lake Forest Real Estate Companies

Dealing with the property matters has always been a specialized task, especially if you are planning to get settled in one of the most sought destinations, Lake Forest, California.

Lake Forest is renowned for its beautiful environment especially for moderately warm Mediterranean weather, lush green hills, attractive lakes and Eucalyptus forests. This is one of the soundest places to live with your family under the arms of amazing natural surroundings. The real estate companies in the region can be a real help in buying the best home of your choice in Lake Forest.

Real estate in Orange County has gained a significant momentum as a tremendous number of investors have finalized their deals in the areas like Santa Ana, Tustin, Irvine and Fullerton.

Orange real estate agents find Lake Forest one of the captivating places not just because of charming landscape but also for strong infrastructure and educational facilities. Dedicated real estate companies in Orange County must definitely be able to cater you with the best desired results. Nevertheless, you need to be little extra analytical and cautious. Lets highlight some of the important aspects and characteristics in a quality real estate organization.

Comprehensive: A company must understand the kind of budget you can afford and what exact amount you desire if you wish to sell a property. A good real estate agent or a company must have the proper information about the property value, future returns and the important aesthetic significance about the territory.

Good bargaining: You should be able to negotiate without any hesitation with the help of the real estate company.The real estate professionals should be wise and go getters. They must keep working hard and eagerly to find you the best real estate solutions.

Goodwill: A company must hold a good respect and should be a reputed organization with some influencing past experience. You must be provided with all the important information regarding various state laws and regulations.

Finance facilities: If you are looking for a home loan, your real estate agents must guide you with the eligibility criteria and best credit services according to your profile.
Apart from figuring out on the qualitative aspects of the real estate companies in Orange County you need to focus on the following steps for a good search.

  1. Try to scrutinize the different orange real estate agents for their commissions and charges.
  2. List the real estate companies with an internet search, check out their profiles and work history.
  3. Establish a transparency with your budget among the real estate companies for an accurate search.
  4. All the judicial settlement and paper work should be explained in detail. Never forget to read the final contract paper carefully before signing.

Choosing one out of many real-estate companies in Orange County must be a little tougher task but a good wise selection will surely help in your all real estate solutions.

Berwick A Real Estate Profile

Everyone knows that moving is not fun. Its amazing how much stuff which we acquire in a short time. We have nice elements plus don’t want them damaged. You wish a moving organization to trust and which may provide all of the services which we require.

After living in La Fortuna for a month, I learned not only the tourist attractions and the local hot spots. Aside from the massive disco-tech at the edge of town, I fell inside love with a regional costa mesa realtor rope spring plus cliff diving place! Located along the Rio Fortunal there is a bridge on the way to La Cascada or the waterfall. Look beneath the bridge plus you’ll find Ticos virtually swinging from ropes and doing flips into the water. Spend a limited hours reading found on the sunlight baked rocks or dive off the cliffs from a variety of ledges.

A teacher could never embarrass a student inside front of their peers for violating any guideline or disrupting the class. It would make the student more unruly and violent. If a student is really stubborn, plus is not following the rules, then talk to him inside private to know the exact reason behind his behavior.

If this is the first time you’re ever getting a realtor, we need to understand the basic procedures on how they ought to be approaching we Newport Beach Realtors for company. For example, contracts are never signed at the start of any deal. Additionally, cash does not want to be paid until a house has actually been found along with a contract has been signed with a lender.

The training can provide we the abilities to troubleshoot plus repair mechanical plus electric issues securely and effectively. Attending a Mesa heating school there are profession costa mesa property management training that can help we to receive started because a technician in months, rather than years. You’ll gain “real-world” abilities which usually put you years ahead inside the job marketplace, with no “down” time, while giving we practical experience. And remember, HVAC technicians function inside a field where you will not be changed by a machine.

Certificates or a few of shape of credentials are a good way to determine that the plumber can do what he states he may do. This is an area where you need to be bold plus ask issues because when the plumber which we hire screws up then it will cost we more down the road. Keep in mind that we are paying for the service and any reputable Mesa plumber will have no issue or take offense to any questions regarding his functions.

Most service providers usually include short testimonials from people that they claim utilized their services. Contact the Newport Beach Real Estate plumbing business plus receive strong information to check which these references are valid. Call up a few of the numbers which they provide to confirm that these customers were indeed pleased with all the service. Check with your friends to locate out if they have selected the service or to receive their referral for another service.