Why would anyone accept a lease option, rent to own deal? Why would you, as a seller/investor look to find rent to own tenants? How can you use this technique to LOCK IN profits that are much greater than would be found in a straight sale?

Basically, the advantages depend on which of two end results occur: either the rent to own tenant completes on the property, or they don’t. You make money either way!

There are MANY people who have less than sterling credit, might not have a long time on the job, or not have a ton of money for down payment, closing, etc. Many people WANT to buy a house - and they expect their credit, job conditions, down payment amount to improve over time. They LOVE the idea of being able to buy NOW, on a rent to own basis. You can help these people out, and be paid handsomely for your efforts.

I’ll assume a $100,000 property, and you would offer $5-10,000 down, but be willing to take even less, even possibly take monthly payments for the down payment. Because of providing “easy credit”, you can increase the price by an amount of between 5 and 20%, depending on how long the rent to own period is, your local market, individual’s credit situation, etc.

Lets say you buy a property for $90,000 that is worth $100,000 in the open market, and is advertised at $110,000, with 5-10,000 down, and monthly payments of $750 over a 3 year period. Note that ALL of these numbers are variable - whatever works for YOU and your rent to own customer. You have LOCKED IN a profit of $20,000 in 3 years time, less mortgage pay down, with $750 a month to make any mortgage payments in the meantime. Use a mortgage table (it depends on the interest rate charged) but it wouldn’t be any more than $100 a month that the mortgage is reduced by. Total profit would be $20,000 less $3600 mortgage paid down, with $750 a month to offset any carrying costs, mortgage, etc - not a bad deal!

Should the tenant be unable to complete on the purchase at the end of the term, you can agree to renew the agreement for another period, with a higher purchase price.

That sounds like a very good set up for the vendor, but what if the rent to own tenant bails out on the agreement? The majority of rent to own agreements fail to complete, so this is a fairly likely occurence, but can be reduced by picking your tenants well.

In this case, you are left with the down payment of $5-10,000, payments that covered the mortgage and carrying costs for however long the tenant stayed for, and they probably took MUCH better care of the property than a normal tenant, as it was THEIR property!

You can simply advertise for another rent to own tenant, and collect another deposit, continue collecting rental amounts, and continue carrying the property at no cost to you.

You can carry a portfolio of properties with this method - there are virtually no maintenance requirements - its THEIR property, so THEY have to fix it, mow it, weed it, paint it, etc - and you can carry as many properties as you can get financing for, or even “buy” under a rent to own, lease option type of agreement and then rent out to other tenants at a higher purchase price!

The options are endless - and it doesn’t take a lot of ads to find a TON of willing rent to own tenants! You can set up the deals however you wish, and you can “give them a good deal” by reducing the deposit requirements, or extending the term - you win either way!

Andrew Larder Creative Real Estate

To receive free info on no or low money down real estate investing, send a blank email to: monopolyinvestments@getresponse.com

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As a landlord, when renting your home you can run into several problems. Some tenants may even appear to be the perfect match for you and your home until after they move in and you see what they are really like. The following are several problems you can run into when renting your home.

One of the biggest problems a landlord can face is late payments. Even if the tenant appears to have perfect finances and good references, they can still be late on payments. It is best to document each late payment on behalf of the tenant so you can have ground for an eviction notice should it become necessary.

If you are renting a fully furnished or partially furnished apartment or home there can be problems as to what is your and the tenants when it comes time for the tenant to move out of the residence. Therefore, it is best to clearly state in writing at the time of renting what cannot be removed from the residence. This will help to give you a legal recourse in case something is removed if the tenants do not notify you.

Another common problem is that of improper removal of garbage. If garbage is not collected, not only does the area become unsanitary but also your property can begin to look run down. Therefore, in the contract state how often garbage must be removed.

Along these lines, cleanliness can become an issue with tenants. This cannot only become a health hazard to your tenants but also to the neighbors as well. Therefore, set clear cleanliness guidelines in the contract.

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It’s the American dream — a home of your own. Too bad the American reality is much different — a mortgage, repairs, insurance and added responsibilities weigh on every homeowner.

It is a big step to take. Whether you are a renter looking for your first home, a growing family needing a bigger space or a retired couple looking for a peaceful retirement, buying a home is a daunting task. There are signs to let you know that you are ready to buy.

Sign #1: Finding money isn’t an issue

Sounds funny, doesn’t it. Most consumers have a lot of trouble finding extra money. But if you have the money for a down payment and closing costs, then you are ready to buy. The down payment will range anywhere between 3% and 20% of the property value. You should aim for 20% down for several reasons. First, you will owe less, have less of a payment and pay back less in interest. Second, you won’t have to pay Private Mortgage Insurance (PMI or MI). If you pay less than 20% down, you will be required to pay for PMI until you pay down your mortgage principal under the 80% mark.

A lot of people forget to factor in their closing costs. You will have to have cash on hand to pay for points, taxes, title insurance, financing costs and other prepaid or escrowed items. You can expect closing costs to hit anywhere between 2% and 7% of the property value. I suggest being on the safe side and making sure that you have the 7%, just in case. You should receive an estimate of the closing costs (a good-faith estimate) from your lender within three days of applying for a mortgage. But be aware that cloudy titles and other circumstances can cause your closing costs to be higher than expected. The estimate is based on a simple, pain-free closing.

Sign #2: Knowing your finances

Do you know your finances front and back by memory? You should. It’s part of financial management that comes with successful habits that you practice regularly. Budgeting, debt reduction and savings are a part of your management. For example, proper management results in a person who can, within five minutes, tell you their net worth, how much they owe, who they owe and how much they have in savings. Someone really on their toes can tell you their recent credit score as well.

If you know how much you can afford, you are ready to buy. Freddie Mac suggests that your monthly payments be less than or equal to 25% of your gross income. But you should look at your debt and other expenses when deciding how much of a home to purchase.

Sign #3: No curves in your credit

If your credit report is a straight and narrow line to a great credit score, then you are in good shape. One of the most important things a lender will look at is your credit report and score. This is affected by how much debt you have, how much credit you have available and whether you pay things on time.

Well in advance of starting to consider buying a home, check out your credit. Get a report from each of the three credit reporting companies (Equifax, Experian and TransUnion), because they each can contain different information. Take your score with you when you apply so that the lender knows that you are aware of your credit situation. If you’ve applied for a lot of loans in the past, you may have encountered the occasional lender that likes to say you have marginal scores, when in fact they are perfect. This is simply to get you to pay a higher interest rate on your loan.

There are many other signs that you are ready that are more personal, such as the longing for a place of your own. We all find that our timing for making the move is different. Some of us buy as soon as possible and for some, it is best to remain a renter. But make sure that you aren’t just making an emotional decision, but a financial one as well. Be smart and that American dream and American reality may fit well into your life.

Martin Lukac, represents http://www.RateEmpire.com, a finance web-company specializing in real estate/mortgage market. We specialize in daily updates, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies! Visit http://www.RateEmpire.com today!

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