LEASE/OPTIONS – SELLING HOUSES WHEN NO ONE ELSE CAN
One of the best ways to sell single-family houses anywhere and almost anytime is with lease options. My special lease option works in good times or bad, regardless of an up and down economy. You’ll find my lease option is different than most selling options because I’ve eliminated the two biggest reasons why most lease options fall apart. Naturally, my lease option agreement is designed to fit my own special needs, but there are excellent benefits for both sides. Options designed with my plan can be a good solid money-maker – plus, they provide an excellent opportunity for weak buyers to become property owners.
As with all my real estate transaction- it’s the benefits that make the deal work. Benefits for both parties must be attractive and desirable, otherwise – who wants to deal? Selling with a lease option the way I do is not dependent on a good economy and works regardless of whether banks are making mortgages or not! Here again, as with most of my real estate transactions - I will control all the moving parts! Once the parties agree, there will be no surprises later on caused by events that I can’t control.
My typical transaction involves a house with a market value of $250,000 that generally rents for $900 per month in my town. The rent to value ratio is only .0036 per month – or 4.32% annual return (12 months x .36 = 32%). Obviously, from a cash flow standpoint, there’s no contest when it comes to renting cheap inexpensive houses versus larger homes with acres) 0f carpet. Quite often people say to me — Cash flow is not everything, ya know! I agree – but it’s still a long ways ahead of whatever’s in second place! Remember I told you - cash flow is my primary motivation, but here are other benefits for me as well. Here are the most important to me
1. CASH FLOW – HIGHER RENTS – 25-30% RANGE
2. TOP SELLING PRICE – SOMETIMES 110%
3. LONGER TERM TENANT – 3 YEAR MINIMUM
4. BETTER PROPERTY UPKEEP – MAINTENANCE
5. INTEREST INCOME, LONG-TERM CARRYBACK MORTGAGE
My lease options are designed for a period of three years. Tenants must lease my house for the full 36 months – then make their choice either to buy the property or terminate the lease. I do not extend my leases since there is no reason why my tenant cannot follow through and complete the purchase. The reason for 36 months is because that’s how long it will take my leasing customers to accumulate the down payment from the monthly rent credits I allow him for that purpose.
3 Responses to “LEASE/OPTIONS – SELLING HOUSES WHEN NO ONE ELSE CAN”
Discussion Area - Leave a Comment
You must be logged in to post a comment.
Jay,
Today I am starting an ad in the newspaper for my first “lease-option” tenant/buyer. I plan on using your 3-year contract system. The market rent for my house is $475.00 but I wil lease-option it at $600.00/month if I can find the right tenant / buyer. If not, I can always drop back ten yards and punt,…and just rent the house at $475.00/month.
Roy
good morning Jay, Maybe this falls under the category of abuse, if this ain’t the right place for my ? then I will understand if you delete it from this site. I don’t ever want to take unfair advantage of such a nice guy (ok, nuff smoke) At this time Jay, my wife & I have several properties w/ approx. equity valued around 250 K .They are all exellent cash flow units, some have conventional morgages, some w/ owner fin. morgages & others clear deeds. We are facing a bump in the road within the next month or shortly there after. Not alot, but we will need to get about 20K to smooth out the bump & thought while we were there we might retrive some extra for down pymt opportunities we are looking at.(maybe an addtional 10K or so) I know this appears to be a nobrainer and may well be but, be patient please and remember my learning disabilities. We took a hit last month on our credit (30 days out) which always seems to be marginal at best, so we are below the magic # . We actually have 1 goose free & clear (w/ positive golden egg flow of $500. mo.) that would be marketable but for obvious reasons we ( I ) don’t know the best avenue to travel to get the rabbit out of the hat w/ out killing the goose. One of the main delimas is time but there are certianly other hurddles as well as some brick walls. I really don’t know any user friendly investers or hard money folks. I have a father-in-law w/ exellent credit #s that would likley be willing to assest but he dosn’t need me hanging out on his stuff & if we could come up w/ some other plan then thats what we are looking for. I’m not ruling out a possible conventional morgage on this structure but don’t know if thats doable. Again, just trying to impliment the wisdom that we have been so graciously made stewards over. Jay again, thank you for the use of your brains . I am constantly amazed & extreamly intertained w/ the insites you bring to the table. I look forward to your gracious responce. Regards Gerald
I much prefer to keep the property and borrow the money you need. Given your credit, your best bet is some lender like Beneficial Finance, Morris Plan, etc. These are chattel mortgage companies who loan on furniture and real estate. Little higher interest – but easy to get.
Fixer Jay