Lease Purchase Benefits

Property Owners – Benefits of Offering Lease Purchasing For Your Home

Lease Purchase or Lease Option Agreements are a great way to sell property, whether it is a rental property or your own residence, in a sluggish market. It offers the buyer an opportunity to become a homeowner, not just a renter, an opportunity for which your buyer will be extremely grateful. Because of the features and benefits, Lease Purchases and Lease Options are used by some of the most experienced real estate owners and investors.. In this section, we will simply refer to “Lease Purchases,” but that will include Lease Options as well.

Benefits of Lease Purchase for the Landlord/Seller

If you don’t need all your equity right now, the best way to get your full asking price and a higher than average monthly rent for your home is to sell it on a Lease Purchase. Since you are assisting the tenant/buyer with a plan for home ownership, they tend to be willing to pay a higher sales price and higher than average rent to get started on that path. Help your Tenant/buyers understand the concept of trading price for time and value.
When you offer a Lease Purchase on your home, you receive a non-refundable option deposit. You determine the amount of the deposit you require. You will receive the majority of your profits at closing, when and if the tenant/buyer exercises his option to buy. In the event the tenant/buyer defaults or allows the option to expire, you will retain the non refundable option deposit. You are then free to begin the process again.

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ADDITIONAL BENEFITS FOR THE LANDLORD/SELLER:

Sales Price At the Top of the Range. You attract more buyers who are willing to pay a premium to get on the path to home ownership, allowing them time to raise a larger down payment or improve their current financial situation.
Above Market Rent: Since you are flexible on the terms to accommodate the Tenant/buyer’s situation, you can demand a higher than usual rent.
Positive Cash Flow: Since you can demand a higher than usual rent, your positive cash flow will increase.
Non-Refundable Option Consideration – Up Front Minimum Risk: When a tenant/buyer signs a Lease Purchase Agreement, you receive a non-refundable option deposit that is yours to keep should they default or decide not to buy.
Faster Marketing: Since Lease Purchases are in high demand, you will save on advertising costs because your home will move more quickly. Also, you can offer your property for straight rent and for Lease Purchase at the same time. You are now drawing the interest of a larger market: the regular tenants and those in the market to purchase a home. Time on the market is much shorter than if you have the property listed for sale only.
Attraction of the Highest Quality Tenants: Because you are renting to tenants who have a vested interest in your home, they think like homeowners and tend to take good care of it.
Less Maintenance: Tenants who have a vested interest and believe they are a homeowner may feel a “pride of ownership” that encourages them to pay on time, perform maintenance and make improvements to your home. Just make sure you require prior written approval for any improvements your tenant makes to the home.
Because your name is on the deed, tax benefits are in place for you until you actually sale the property.
Lease Purchases over 12 months in length may make the qualification process for a mortgage easier for the tenant, and make a large loan with a lower down payment possible. This will help you close the deal at a higher price.

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