Hi, this is Frank Chen with REIClub.com, the only site you need as a real estate investor. Today I've got a quick video on selling your real estate investment using a lease option with the option to purchase.
Main Benefits For Selling using Lease Options :
– retain ownership of the property, tax benefits
– increase monthly cash flow
– no minor maintenance issues
– sell price higher than the current market
– higher monthly payment compared to a tenant renter
Marketing Your Real Estate Investment
– ads – craigslist, green sheet.com, etc…
– bandit signs
– etc… tons of marketing videos
– to locate tenant/buyers / build buyers list
Screening Tenant Buyers
– Background checks
– Credit history
– Use voicemail system
– Houses available via rent to own
– Name, phone, email, fax
– How much can they afford to put down
– How much can they pay monthly
– Much faster than screening each call from your ad
Lease Options Agreement
– Two Lease Option Agreements
– Lease Agreement
– Option Agreement
– Agree to a purchase price – fixed number – 5-10% more than market (convenience and appreciation)
– appraisal to validate price
– banks loan to appraised value, not the agreed amount between tenant buyer and landlord
– Option money – 2-4% of purchase price (secure the option)
– secures option – down payment
– If not, real estate investor keeps
– Rent Credits – what portion of rent goes towards balance? Usually $100-200
– reduce closing costs
– reduce sales price
– usually lenders disallows this – problematic for tenant buyers
– you also may hear about rent credits in courses, but we suggest to keep it simple and skip it when selling
– Term of lease option – 6-24 months
– Time needed for credit repair?
– Insurance
– Change your policy to dwelling
– Tenant needs own liability insurance
Lease options create a unique opportunity for real estate investors. They allow you to work with people who would otherwise not be able to qualify for financing, you get increased rents, a reliable tenant, and it allows real estate investors to move your real estate investments in a slow market, One thing to pay attention to are the varying state laws on lease options, basically different requirements, so be sure to brush up on your own state.
Again, this is Frank Chen with REIClub.com. Please take the time to leave your comments for this video below and please subscribe to our YouTube channel so you'll be automatically notified when we upload more quick video tips for you. Take care and good investing.
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