“What Is Real Estate Lease Option?”
By James Nsien2
http://james-nsien2.com
A “lease option (or lease purchase)” is the abbreviated form of the appropriate term “lease with option to purchase.” A lease option is similar to a purchase option in that it grants investors the right to purchase property at a predetermined price within a stipulated period of time. In other way, a Lease 2 Purchase contract combines a basic lease contract with an option to purchase contract, which creates a Lease 2 Purchase contract. . Lease options combine the basic lease or rental agreement with an option to purchase contract
Contract:
A contract is an agreement between two or more persons (individuals, businesses, organizations, or government agencies) to do, or to refrain from doing, a particular thing in exchange for something of value.
Key elements to a binding real estate contract:
1. Offer and acceptance: Original signatures with no modifications to the deal. If the original offer is marked up and initialed by the party receiving it, then signed, this is not an offer and acceptance but a counter-offer. Any final agreement should be reduced to a final writing and signed by both parties.
2. Consideration: A bargained for exchange of something of value. Money is the most common form of consideration, but a promise to perform (i.e. a promise to pay) is also satisfactory.
3. In writing: A real estate contract must be in writing and it must:
o Identify the parties: The full name of the parties must be on the contract.
o Identify the property: At least the address, but preferably the legal description must be on the contract.
o Purchase price: The amount of the sales price or a reasonably ascertainable figure (an appraisal to be completed at a future date) must be on the contract.
o Signatures: A real estate contract must be signed to be enforceable.
o Legal purpose: The contract is void if it calls for illegal action.
o Competent parties: Minors, mentally impaired, drugged persons, etc. cannot enter into a contract.
o Meeting of the minds: Each side must be clear as to the essential details, rights, and obligations of the contract.
Lease contract:
A lease contract is an agreement, usually written, between the owner of a property and a renter who desires to have temporary possession of the property. As a minimum, the agreement identifies the parties, the property, the term of the rental, and the amount of rent for the term.
In addition to the basics of a rental (who, what, when, how much), a housing rental may go into much more detail on these and other issues.
Option contract:
An option contract is defined as “a promise which meets the requirements for the formation of a contract and limits the promise’s power to revoke an offer.”
Or, quite simply, an option contract is a type of contract that protects the individual making the offer (the offeree) from a seller’s (the offeror) ability to revoke the contract.
Lease to Purchase Contract:
Again, it’s very easy. A Lease 2 Purchase contract combines a basic lease contract with an option to purchase contract, which creates a Lease 2 Purchase contract.
The tenant/buyer pays to the landlord/seller a nonrefundable option deposit that is applied to the purchase price of the home. The tenant/buyer then pays to the landlord/seller rent to compensate the landlord/seller for the tenant/buyer’s use of the property.
Rent payments are usually made on a monthly basis. A portion of that monthly payment is often applied to the purchase price and/or the down payment of the home.
During the term of the lease, but before the option expires, the tenant/buyer has exclusive right to buy the home under the terms to which both parties have previously agreed.
Landlord/Seller Features & Benefits:
Here are some features and benefits buy cialis online for the landlord/seller:
Top sales price, even if demand is low: You attract more buyers who are willing to pay a premium because of the exclusive financing terms and value you’re offering.
Higher than usual rent: Since you are flexible on your financing terms and are offering a tremendous value, 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: When a tenant/buyer executes (signs) a Lease 2 Purchase contract, you receive a non-refundable option deposit that is yours to keep should they default or decide not to buy.
Save thousands in fees: Since you are selling your home by owner, you will avoid paying a 5-10% realtor commission which quickly adds up to thousands of dollars. You will also save on advertising costs because your home will be sold a lot faster.
Highest quality tenants, minimum risk: 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.
No maintenance, no landlording headaches: 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 routine maintenance and make improvements to your home.
Tax shelter is held intact: Because you remain on the deed until the option is exercised, you maintain all of the tax benefits of ownership.
Largest market of buyers: You are marketing your home not only to traditional buyers, but also to renters and investors. These three groups make up over 95% of people whom buy real estate.
No vacancies: When you advertise your home as a Lease 2 Purchase your phone will literally ring off the hook. Typical turnover time is days or weeks instead of months or even years.
Peace of mind: It is safer than conventional rentals because of the buy Januvia online quality of the tenants and their vested interest in your home. It also means that someone is living on-site who will watch and guard your home against fire, theft, vandalism, etc.
James Nsien2
NCN Real Estate Investments, LLC
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Originally posted 2009-04-16 21:40:05. Republished by Blog Post Promoter