Why a Lease Option is One of the Alluring Real Estate Investing Secrets
A lease option is often a seller’s last resort. The market may be bad and no one is buying real estate. The property may have some quality that makes it difficult to sell or for buyers to obtain a loan or insurance. The seller may have had the property on the market for a while and can no longer afford to make the mortgage payments, so he decides to pursue a lease option. Whatever the reason, most sellers don’t immediately choose to use a lease option to sell their homes. This is one of the reasons why lease options are one of the real estate investing secrets that attract investors.
A motivated seller
One of the best situations an investor can find themselves in is when a seller is more than ready to sell. In the case of a lease option, the seller is ready to move this property. This means that you, the investor, have the upper hand. The seller is likely to agree to any terms he has or things he would like to change about the lease option agreement. You will find that the negotiations are not as difficult as they can be with a typical real estate transaction. Remember that the seller is often in a situation where he needs to move this property. Take advantage of that and get a contract that works perfectly for you.
Minimum risk
A lease option is not as risky as other investment opportunities. You will have to make a down payment, but if you can get a tenant to move in, you won’t pay the lease payment each month like your tenant will. Also, you haven’t bought the property yet. If you discover there is a major structural failure or the market is horrible when your lease ends, you can walk out and only lose the initial investment you made in the property.
An opportunity to invest
For many investors, this is one of the best secrets to investing in real estate. In fact, it is the only option they have to invest. New investors may not have the ability to obtain a mortgage to purchase a property upfront or may not have the cash available to purchase a property. A lease option gives you the opportunity to start a career in real estate investing, even if you’re not rolling any money or have amazing credit. With this type of option you won’t need a lot of money up front. You can close the deal for a small amount of money that is much easier to come by than the full price of the property. You also have time to fix up the property so that you can sell it later, since you will have to wait for the end of the contract until you can make the purchase. You have time to make repairs and raise the necessary funds to make the purchase once your lease option ends.
A lease option may not be the right option for all investors. In fact, some investors actually despise them. However, for many investors, a lease option is the perfect way to make a nice profit or even start investing in real estate. And there you have it; one of the valuable real estate investment secrets.