No Money Down Real Estate Financing
Remember that statement. -- Give it to them.
There are literally a huge selection of various ways to acquire real estate. In future articles, I will be sharing some of the numerous different innovative techniques used in creative real estate financing. In this short article, were going to explore an invaluable and profitable creative real estate financing technique commonly called Lease Purchase Options. For simple explanation, we will reference Lease Purchase Options as Lease Purchase.
What exactly is just a Lease Purchase?
A Lease Purchase is a procedure the place where a rental agreement is coupled with a purchase or an alternative contract. Price, period of contract, escrow instructions, rent credit and other pertinent terms are all negotiated in advance. This allows the tenant/buyer to truly have a defined percentage or dollar add up to be credited to an advance payment or off of the total purchase price of the property each time a payment is made.
First and foremost, you should know what needs, wants, and desires the "right" property will fulfill. It's obvious that those needs, wants, and desires would be the requirements of someone. That somebody could be the investor. It's the investor who establishes the worthiness of any little bit of property available on the market by his / her requirements.
A real estate investor always has only two considerations. Those a few things are:
1. A get back on investment or Profit. (also known as ROI)
2. A get back of investment or Security.
Remember that no real matter what the circumstances HUD are surrounding an investment, those two considerations are usually the same: some type of profit (i.e. dollars, property exchange or other goods and services, tax savings, personal use) and security, or an assurance that the original investment will remain intact and could be recovered.
The Lease Purchase, (also known as a lease option), has everything an investor needs to produce a profitable investment in real estate. Utilizing small down payments of 1% to 2%, an investor can control properties that will usually require 10% to 30% down, without ever having to view a lender or go through the loan application process.
There are three various ways a great deal can generate profits.
1. Cash upfront with option consideration
2. Cash monthly in the shape of rent
3. Cash at closing or an email
Other available choices involve "flipping" of the optioned property to a 3rd party or simply acting as a consultant for the buyer and seller, retaining a percentage of the option agreement. Controlling properties by making a lease purchase option is, undoubtedly, the simplest way to be involved in controlling homes and obtaining great cash flow, high profits and minimum risk. Lease Purchase could be the simplest way to make a quick cash flow for initially homeowner as well as the seasoned investor.
The main element ingredients in putting together a profitable Lease Option are:
1. Locating a motivated seller
2. Determining what his Needs and Wants are and making a win/win situation.
3. Locating a tenant/buyer
Question: Where do I locate a Motivated Seller? Good question.
Remember a motivated sellers'number 1 objective is to get rid of their property - when possible. A sellers'motivation can come from many different situations:
o Relocation - job transfers
o Financial difficulties
o Death/divorce
o Tennant problems
o Change in family size
o Building a new home
You'll need to determine what the sellers'motivation is when you contact them. Often a seller is facing financial difficulties and at other times it's just he no more really wants to be bothered with the property while he now has other interests. Our first priority then in talking with the person initially is to determine Wants versus Needs. Most motivated sellers fall in the Need category. Their situation may not be negative. In the above mentioned list there are several items which can be very positive for the seller. But still it remains, this property is no more needed for whatever reason(s).
You'll find these deals:
o Looking in classified ads - "Homes for rent or lease" or "On the market by Owner" ads. You are able to ask if they'd be interested in giving an alternative to purchase their property if you lease it from them.
