Question:

Is it good to lease a home with an option to buy?

by Guest64479  |  earlier

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Me and my fiance are looking into buying a new home. What pro's and con's are there in leasing a home to purchase. I've never heard of this concept and am curious if it's a good idea or not. The reason we are looking into it is because we cannot afford the price of a new home (400k+)

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  1. It is an excellent strategy in this market.

    I used to specialize in this type of investing in Texas before some laws changed.

    It is basically a one sided contract. If the market goes the way you want it to, you have the option to buy,(they have to sell at the agreed upon price), it the market goes the other way, you just walk away.

    The objective as the buyer is to put as little money down as an option fee as possible, get as long of an option period as possible dont be afraid to ask for six years (72 months is better terminology), most people will settle for 24-36 months. The longer you control the property without purchase the easier it is to finance. The smallest amount of rent each month and the largest rent credit.

    Learn everything you can about lease options, then find a motivated seller and negotiate a deal with them, you will not get the best deal from a Lease Option RE Investor. (I'm one)

    An excellent place to learn about lease options is here:

    I bought this course and I now make a good living real estate investing. You will not make a mistake buying this course even if you use it just to buy your own house.

    go to the top link below.

    good luck  -John

    btw I prolly got a thumbs down from an "expert" that gets paid when you do a conventional loan, and really is probably closed minded. There ARE good deals out there. They can be good if YOU are in control of the  contract.


  2. Pros - cheaper mortgage

    Cons - This is a lease, not fee simple.  You're essentially buying the house not the land it sits on.

    Some leases eventually converts to fee simple, but it may take a while if ever.  When it does convert, you'll have to pay a fee, usually enough where you'd need to refinance your mortgage.

    Probably better to buy what you can afford and later upgrade when the time is right.

  3. well the cons is that you could pay it off slowly and the pros is that if you dont buy the house your morgage rate could go down

  4. it's called simply a lease/option in the real estate business and YES it is a good deal for both buyers AND sellers. I bought my first property this way. You really need a good realtor to explain the process to you, but you also must be aware the agents tend to dismiss this scenario because they have to wait until you exercise your option and the deal closes before they collect their commission and many don't want to do that. So if an agent doesn't want to explain anything, just say thank you and get up and leave--eventually you will find a good agent. That said, in a lease/option, you pay up front maybe two or three per cent of the purchase price, and this money would go towards the down payment should you decide to buy. We'll say it's on that 400k house you "can't afford" and lets say you pay $10,000  for this "option" (which is about the norm in L/O's). Then lets say you have a $1500/month "rent" with 33% of that money also going towards the future down (or, $500/month). . The lease is for a year, and ten months from now (or from the beginning of the lease) you decide you want to buy. You take your original 10k, plus your 33% monthly "credit" of $5000 and you now have 15,000 to put down. Of course, the downside is, if you fail to purchase, you lose the option money ($10,000) plus the rent "credit". The plus is, if you buy you have that 15k (plus whatever you can save in 10 months) to apply to the purchase. Keep in mind, my figures are just for example--your good realtor will help you structure a maybe better deal, such as a higher amout than 33% going towards the purchase price, a longer option period, etc. In a L/O, everything is negotiatable, so get a good realtor and go for it. Good luck!

  5. that's good, you may take help of real estate agents

    http://www.homesportland.com

  6. Total, complete 100% ripoffs for the "buyer" and I cannot believe that anyone falls for these.

    There are no pros..and the mortgage is NOT cheaper, b/c it's rent, it's always higher than buying outright b/c the LL knows that you have credit issues or else you would buy to start with.

    All a lease with an option to buy is, is where you pay usually a 1% deposit of the agreed upon sales price of the home in advance.  The house DOES NOT go in your name, but you are usually told to maintain the home at your expense as well as pay the property taxes.

    Con:  You don't even know if the property will be worth X dollars in X years...yet it will be a breach of contract if you don't purchase it at that amount.

    Con:  Most "buyers" don't even get an appraisal at this stage...so they are blinding going by what they THINK is fair to pay.

    Question:  Would you RENT an apartment under these conditions?  Of course you wouldn't...b/c you also don't get the tax benefits from it either...the LL does.

    These arrangements usually say you have to buy the property usually within 2 to 5 years, but no more than 5.

    Guess what happens if your credit hasn't improved by then and you can't buy the house???  You get to walk away, but your LL gets to keep that hefty deposit (that is usually in the thousands)....b/c  the purpose of the deposit is NOT to cover damages, but to ensure you buy the house, and if you don't, you are in breach on contact.

    If you cannot afford to buy a house for $400K...do you think you are going to come out ahead renting one????

    Also, since you are not married, if you and your fiance split up during a RTO deal...the court will treat it as a business arrangement and every right you would have had as a spouse will not apply.

  7. Most people go this route because either they do not want to make a comittment or they have credit issues. If you are sure about what you want to do, you better off purchasing, provided you are not over paying for the property.

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