Options On Property
I now have an excellent understanding of the different options strategies that are available for me to use.
I got my education --> HERE
Optioning property has many different uses and outcomes.
The most popular option strategy is called a 'Lease Option'
This is a strategy that is designed to be a win/win option for an investor who is looking for increased cash flow and a person who is looking to buy their own home but has no way of ever being able to afford the deposit. Home ownership is becoming increasingly harder to attain for the first home buyer making this an extremely attractive alternative. A lease-option is a combination real estate rental, sales and finance technique. It is a property lease for a fixed time period, such as 12, 24 or 36 months, with an option for the tenant to buy the property at an agreed option price at the end of the lease term.
The rental charged under the lease is slightly above market rates and unlike a normal residential tenancy the tenant pays for all the repairs and outgoings. The difference between the market rent and the higher amount charged is called an option consideration and is deducted from the purchase price of the option when taken up.
The tenant has the option to purchase the property at a future date for an agreed future price. An initial fee is charged for this option which is then deducted from the purchase price (along with the option consideration paid as part of the rental) when the option is taken up.
Buyers like lease-options because little up-front cash is required. Sellers also like lease-options because they provide necessary cash flow to pay the mortgage from a tenant who has a vested interest in treating the property well and who is likely to buy it.
Advantages for Sellers
Strong Demand From Prospective Buyers
Top Dollar Option Price
Top Quality Tenants
Above-Market Rent
Seller Keeps the Tax Deductions
No Realestate Agent Fees
No Property Management Fees
Advantages for Buyers
Small Amount of Up-Front Cash Required
Monthly Rent Credit Builds a Down Payment
Try Out the Property Before Buying
Control Property With Very Little Cash
Longer Terms Mean Greater Profitability
They Start Living In Their Own Home Rightaway
They Are Protected Under The Residential Tenancies Act
I got my education --> HERE
Optioning property has many different uses and outcomes.
The most popular option strategy is called a 'Lease Option'
This is a strategy that is designed to be a win/win option for an investor who is looking for increased cash flow and a person who is looking to buy their own home but has no way of ever being able to afford the deposit. Home ownership is becoming increasingly harder to attain for the first home buyer making this an extremely attractive alternative. A lease-option is a combination real estate rental, sales and finance technique. It is a property lease for a fixed time period, such as 12, 24 or 36 months, with an option for the tenant to buy the property at an agreed option price at the end of the lease term.
The rental charged under the lease is slightly above market rates and unlike a normal residential tenancy the tenant pays for all the repairs and outgoings. The difference between the market rent and the higher amount charged is called an option consideration and is deducted from the purchase price of the option when taken up.
The tenant has the option to purchase the property at a future date for an agreed future price. An initial fee is charged for this option which is then deducted from the purchase price (along with the option consideration paid as part of the rental) when the option is taken up.
Buyers like lease-options because little up-front cash is required. Sellers also like lease-options because they provide necessary cash flow to pay the mortgage from a tenant who has a vested interest in treating the property well and who is likely to buy it.
Advantages for Sellers
Strong Demand From Prospective Buyers
Top Dollar Option Price
Top Quality Tenants
Above-Market Rent
Seller Keeps the Tax Deductions
No Realestate Agent Fees
No Property Management Fees
Advantages for Buyers
Small Amount of Up-Front Cash Required
Monthly Rent Credit Builds a Down Payment
Try Out the Property Before Buying
Control Property With Very Little Cash
Longer Terms Mean Greater Profitability
They Start Living In Their Own Home Rightaway
They Are Protected Under The Residential Tenancies Act
posted by Adam Baird at 1:22 PM
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