Here is one of the little known real estate investing secrets; A lease option, or rent-to-own as it’s more commonly known, is a real estate buying process that works well if you don’t have a lot of money to work with. A lease option allows you to have a fairly small down payment. You make monthly payments that go toward the purchase of the property. This is often used for situations where buyers are unwilling or unable to obtain a loan through a conventional lender.
Lease Details
When you are in a lease option agreement, the owner of the property cannot sell it. They both agree to a contract stating that they will purchase the property. The agreement will describe the monthly payments, the term of the agreement, and any final payment options or actions that will take place once the deal is finalized and the purchase is complete. Once the agreement is executed, you, the buyer, become responsible for it. You will need to maintain insurance on the property and make any repairs.
subletting
When you are drafting your lease option agreement, you should pay close attention to the details about subleasing. This is where the secrets of real estate investing begin to emerge. In some cases, a seller will insist that you agree that you and only you will occupy the property until it is sold. If you’re interested in investing, this probably won’t work for you. The best option is to make sure that you are allowed to sublet the property. Subletting means that you rent the property to someone else. That person is just a tenant. You are still considered the buyer and become the owner.
Important point to keep in mind
With leasing, the monthly payment you make may be more than you would pay on a typical home purchase. This is because the seller may include additional costs to cover his risk. In general, the amount of the payment will be based on the mortgage payment made by the seller and an additional amount will be added to it.
If your intentions are to sublet, then it is very important to make sure that you can rent it out at a reasonable price. You will need to check rental rates in the area. In order to make money from the deal, you will have to charge more than what you are charged. Do some math to see how much you can make on the deal.
determine a good deal
Generally speaking, subletting can be a great opportunity for you. You can build credit through the original lease, while earning money. As long as you can find a good tenant, you may end up with a good deal. You will pay nothing, as you will be charging your tenant the cost of their lease payment plus a little extra that can go right into your pocket.
Just make sure you source and create good deals. Review your lease carefully. Make sure you can sublet. Find a good tenant who has good credit and a good rental history. Make sure you’re smart about your leasing and subleasing, and in the end, you could have a great investment on your hands. Follow all these steps and you can take advantage of one of the top real estate investing secrets around.
Here’s to your success as you discover top real estate investing secrets!
