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Go To Lease - Purchase Explained
Rent to Own Benefits
General Features & Benefits
The Lease - Purchase contract is the quickest, easiest and least expensive way to buy, sell and invest in real estate. It replaces the typical adversarial relationship that usually exists between buyers and sellers with a win-win method of transferring real estate ownership. Specifically (if you're the buyer), you will have minimum cash out of pocket, credit problems are okay, faster equity growth, increased buying power and peace of mind.
Tenant/Buyer Features
If you are in the market to buy a home, you are probably aware of the advantages home ownership provides (tax shelter, appreciation, security, etc). If you are actively seeking homes for sale on a Lease - Purchase agreement, you are either
- A very smart renter.
- A very smart real estate investor.
- Not ready to make a commitment.
- Cannot yet purchase a home through conventional means.
- Any combination of the aforementioned.
The Lease - Purchase contract provides you with many benefits, but perhaps the most powerful one is the rate at which you accumulate equity. Compare any lender's loan amortization schedule to that of a Lease - Purchase contract and you'll quickly see that the Lease - Purchase contract wins hands-down -- every time. Moreover, the buying power of a Lease - Purchase contract can quickly and easily land you a home that you could only dream of buying the conventional way.
Here are some features and benefits for the tenant/buyer:
- Faster equity growth: Equity accumulates much faster (five times or more!) than with conventional financing through a bank or lender.
- Rent money is working towards purchase: Every month a portion of your rental payment (typically $100-$500) is credited towards the down payment or purchase price off of the sales price.
- Option money is credited towards purchase: When you sign a Lease - Purchase contract, you will pay the seller an option deposit. This money is your vested interest in the home and will be fully (100%) credited to you when you buy the home.
(See: FUNDS RETURNED TO BUYER (YOU) WHEN THE OPTION IS EXCERSIZED)
- Minimum cash out of pocket: When you purchase a home the conventional way, you usually must pay between 5% and 30% down plus closing costs and prepaid fees at closing. When you buy with a Lease - Purchase, you only pay first month's rent and an option deposit.
(See: TYPICAL CASH REQUIREMENTS FOR BANK FINANCED REAL ESTATE CLOSING)
- Increased buying power: When you buy a Lease - Purchase home, you purchase your option and put down the first month's rent. Compare that to a typical bank or lender who requires 5-30% down plus closing costs and prepaids
(See: TYPICAL CASH REQUIREMENTS FOR LEASE - PURCHASE CLOSING)
- Credit problems are okay: Qualification restrictions simply do not exist. You will be approved at the sole discretion of the landlord/seller.
- Control of the home: You will be put in full legal control of the home for a specified period of time without actually having to own it.
- No taxes, less liability: Since you do not own the home (yet), you will not have to pay property taxes and your liability exposure will be dramatically reduced.
- Quick move-in time: You can typically take possession of the home in a week or less. (Standard real estate deals normally take a month or more just to close after an offer has been accepted.
- Maximum financial leverage: You are spending very little to control a potentially expensive, and very profitable, piece of real estate.
- Time: Before you actually buy the home, you will have time to repair your credit, find the best interest rates, investigate the home and research the neighborhood and/or schools.
- Minimal maintenance: Large maintenance problems or any maintenance problems that exceed a certain amount of money can be delegated to the landlord/seller.
- Privacy: Your name will not be on the deed or in the public records until you exercise your option to buy.
- Peace of mind: You will have full control of the home and can maintain or improve it however you wish.
- Stability: You can not be evicted for arbetrary reasons.
- No rent increase for the term of the option.
Go To Lease - Purchase Explained
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