Advantages To SELLER (Landlord/Optionor): (Why Sellers/Landlords prefer to Lease Option a property to Tenant/Buyers instead of a traditional rental...) 1. 2. 3. 4. Lock in a competitive market or above-market sales price, even if demand in your market is low. Turn a negative cash flow into a positive cash flow. Receive rents that are higher than market rents, pull out equity if needed. Attract the highest quality tenant/buyer to the property. NO glorified tenants that might trash your property! Because the tenant-buyer invested a substantial deposit, they treat the property like their own with pride of ownership. Receive a larger NON-refundable option fee, instead of a much smaller refundable security deposit. No Management. No repairs or maintenance. Reduced management. Tenant/buyer will take care of pesky maintenance and repairs (with the proper contract). Peace of mind that the property will be taken care of if absentee owner. No long vacancies. Move the property quickly (usually within 30 days or less (if structured properly). This means less advertising and holding costs so you can keep more of your hard earned money. No need to deal with ineffective Realtors or property managers. If tenant/buyers close, you can purchase another equal investment property at a discount. Largest market of buyers, almost anyone can qualify. No closing costs to pay when the property closes (with the right contract). No real estate fees or commissions to pay when the property closes. Retain tax advantages by retaining ownership until sold. Equity build-up as the mortgage balance is reduced. Debt relief even if mortgage payment is higher than market rents (with the proper structure). Ability to renegotiate price, rent, deposit & terms if tenant/buyer can’t close on time. Help somebody else build equity towards the American Dream of home ownership. Your competition doesn’t stand a chance!
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Advantages To BUYER (Tenant/Optionee): (Why Tenants/Buyers prefer to Lease Option a home for their family to live in instead of just a traditional rental...) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. No Banks to deal with! Easier to qualify for than a conventional purchase. Small amount of money needed compared with conventional financing. Rent credits may provide better equity build up than a mortgage. Option deposit is credited towards down payment in nearly all cases. Purchase price is essentially reduced each month with rent credits. Possibility of needing no additional cash at closing. Profit from appreciation if the property goes up in value. Avoid the loss if the property goes down in value. Ability to get into a larger and higher quality home in a nicer neighborhood than you currently qualify for. Immediate possession and enjoyment of the home. No lengthy escrow. No increased tax liability during the lease period. Time to repair credit, save additional down payment, increase income, etc., in order to obtain longterm financing. Time to "test" the neighborhood before buying. Time to try out the property before committing to a purchase. Ability to walk away at the end of the lease without ruining their credit or be stuck with a home they dont like. Pride of ownership. Ability to customize and fix/remodel the property the way they like with the proper authorization. Creating an appreciating asset for their families. Don’t have to deal with ineffective real estate agents or property managers. The relationship with the landlord/seller is cooperative and not adversarial.
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