Table of Contents

1. 12 Reasons A Lease Option May Be The Best Way For You To Buy A Home
2.  Lease Option A Little Money Into Real Estate Millions                                                         
3. Get A Home With Lease Option, No Matter Your Lack Of Credit Or Money
4. Renting VS Rent To Own When A House Won't Sell                       
5. How to Safeguard Your Real Estate Lease Option                                                                
6. You Can Buy A Home Now-Use A Lease Option
7. Discover The Key To Getting Rich With Lease Option & Lease Purchase Investing

1. 12 Reasons A Lease Option May Be The Best Way For You To Buy A Home

 If you have been shut out of the home buying market and don’t see any hope of buying your own home for the next couple of years or maybe longer, then this lease option report will be the most important thing that you'll read in a long time.

While a lease option does not give you the title to the property right away, it does give you the exclusive right to buy it. This means the owner cannot sell it to anyone else for however long you think it will take you to get in a position where you can qualify for a loan, exercise the option and buy the property.

What is a lease option?

 Lease option is a short cut term for the more descriptive term "Lease With An Option To Purchase" and is normally used in real estate, although in some cases it could be referring to a car, truck, machinery or any number of other items.

 Here, as the title indicates, lease option will be the term used for real estate, specifically residential properties, such as single family homes, condominiums, townhouses, mobile homes and could even include 2 to 4 unit properties if the owner occupies a unit.

 Some other terms you may come across instead of lease option, but that all basically mean the same thing are: rent to own, lease to own, rent to purchase or lease to purchase among others. When discussing a lease option with a prospective buyer or running an advertisement I usually use the term "rent to own" as it's easier for the average potential home buyer to understand the meaning of. Even people who are leasing use the term renting.

 A lease option is made up of two separate parts, a lease on the property and an option to purchase the property. The lease is an agreement by which the owner of a real property gives the right of possession to a tenant for a specified period of time for a specified amount of consideration or rent. Along with the lease agreement, an option agreement is signed giving the tenant buyer (T/B), for a consideration or option fee, the exclusive right to purchase the property for an agreed upon price and terms and for a specified period of time.

How and where to find a lease option

 Potential lease option properties are all around us due to a number of factors affecting the owner of the property. Some of these are: work transfer, cannot make the payments, death or illness in the family, moving to a larger or smaller home and too many others to count.

 Most people find a lease option through an advertisement in the newspaper, online or some other medium. If you're working with a good real estate agent many times they will be able to help you find one. If you do not have a real estate agent, go into the phone book and call on some to see if they know of anyone who might be willing to lease to you with the option to buy later. Another way is to spread the word, ask everyone you know or run into if they know someone who might consider a lease option.

 Many landlords don’t even think about doing a lease option so look at rentals and if you see one you'd like to buy ask if they would rent it to you and hen let you buy it later. Do the same thing with "For Sale By Owner" sellers. If you find one that is about ready to rent their property because they can't sell it you have found a potential lease option.

Due to the current housing market many people can't sell their property and are trying to rent instead. A lot of them are trying to cover the mortgage payments with the rent and because it's higher than market rent are having trouble finding a tenant. This is ideal for the T/B, as they can offer to pay the higher amount if the seller will give them a credit for at least double the amount they're paying over market rent.

 Do some advertising yourself. Besides the obvious places like the newspaper and online, put ads on bulleting boards everywhere you find like the grocery store and Laundromats. Print up some cards and hand them out like business cards. If you have a rental association let them know you’re looking for a house to rent to own. A property management company might help you also.

How the lease option works.

 Basically it is applied to a rental property with the renter or lessee paying for the right to purchase the property at an agreed on price for an agreed on period of time. The term Tenant/Buyer or T/B will used to indicate the person who has a lease (Tenant) on the property and has a right to buy it (Buyer).To get the right to buy the property the T/B pays an option fee to the owner of the property, which could consist of money, work on the property, something the T/B owns or almost anything of value.

  As long as the T/B lives up to his end of the agreements he has the right to buy the property for the agreed on price and terms within the agreed on amount of time. If the T/B defaults on any part of the agreements the seller has the right to take the legal action of evicting the T/B and keeping the option fee and extra rent.

 An example of how the lease option works is in the way Larry and Jennifer were able to achieve the American Dream of owning their own home. Larry and Jennifer have been married for a couple of years and have a child with another on the way.

 They have been renting an apartment since they got married and have paid out about $18,000 with nothing to show for it but the rent receipts, which was getting to be a sore spot every time they thought about it. Lately they been discussing the possibility of buying a house so the kids would have a backyard to play in, Jennifer could plant her own flowers and Larry would have a garage to work in plus they could quit throwing their rent money away.

 They were in for a rude shock when they started making the rounds of banks and mortgage companies trying to get qualified for a loan so they could start looking for a home. When loan officers would discover that although their credit was average, they only had about only $1,000 saved for a down payment, Larry had started his own business about 6 months ago and Jennifer was expecting. At this point most of them suggested they work on their credit, save up at least $20,000 and come back in a year or so.

 Needless to say they were devastated thinking about living in the apartment for another year or two and trying to save that much money. Luckily for them, they still wanted to buy a home. A short time later they answered a “rent to own” ad on a house I owned. They were curious about how the “rent to own” worked and would it be something that could help them get into a home.

 After explaining it to them, while they looked at the house, I wrapped it by telling them that if their information checked out it would take at least $6,000 option fee to move in and a minimum lease payment of $1,000 a month. I thought this might be the last I would see of them, but a couple of days later they called. They had decided they wanted to do a lease option on the house and could we meet to work out the details.

 They told me they had gone to both sets of parents and had got commitments for $3,000 and more importantly, a promise of help with the lease payments if they needed it. They made an offer of $4,000 to move in and because Larry had just gotten his general contracto’s license he would be in a position to work off the other $2,000 by doing work on my other rentals until the balance was paid. They said they would like at least a 2 year option period to be able to save for the down payment.

 I agreed to the 2 year option period although I normally like to do it in 2 12 month periods. I also made a couple of counter proposals, one of which was the lease payment was to be $1,200 a month, increasing to $1,250 the second year, and if they paid by the 1st of the month I would give them a $400 a month credit toward their down payment during the 2 years of the option period. This would be 100% interest on what was basically a forced savings account of $200 each month. The other counter was that Larry do $2,500 of work to offset the $2,000 balance and that he could work it into his schedule. They agreed to these conditions.

 I also told them that the sales price would have a 10% premium because they were going to be able to buy (control) a house now instead of having to wait for a couple of years. The premium would also cover any appreciation. Because the present value of the property was $200,000 the price would be $220,000 when they exercised their option. Again they agreed and we finalized the agreements.

 If everything went the way we had it laid out and they were able to exercise their option at the end of the 24 months they would have the $6,000 for the option fee and another $9,600 from the rent credits or almost $16,000 toward the down payment, along with whatever they could save.

 I’m happy to say they were able to get a loan and purchase the property. The statistics say that more than 50% of the T/Bs cannot or don’t want to complete the transaction, for any number of reasons, and end up forfeiting their option fee and extra rent money.

 This is a fairly typical lease option transaction although the figures and commitments on both sides will change to meet the needs and circumstances of both the T/B and the seller. Here you will find the 12 most common reasons of why a lease option may be the only way for you to get into a home of your own today.

 1. The present lending requirements make it almost impossible for the average person to qualify for a loan.

Due to the lending problems and the credit crunch the country is suffering from at the present time the banks and mortgage companies have severely tightened the lending requirements. This is making it almost impossible for anyone, especially someone with average credit and no money, to get a loan.

Even someone with good credit and a normal down payment is finding it hard to secure a loan a good loan. With a lease option you won’t need to get a loan until you’re able to qualify, maybe as long as a couple of years. The lending climate could possible change for the better by then

.2. You don't have a down payment.

 Many lenders are asking for a minimum of 20% down for a borrower with an average credit score and if you have only 10% down, you’ll need an excellent score. Unfortunately there are not that many borrowers who can qualify for a loan in today’s credit environment.

 The great thing about a lease option is that usually you don’t need a down payment, just an option fee. This fee can be anywhere from a few dollars to anything of value that you can trade (labor to fix up the property, for instance). You might also be able to use something you want to keep as security for the fee.3. You're in the process of fixing your credit or establishing credit to get a loan.

This is where a lot of people are today and the lenders could care less about what you’re doing to try to get your credit fixed. They are concerned about right now and they know it could take a year or two to repair your credit. To be able to tie the property up with a lease option while you’re doing the repairs is an ideal situation for a T/B.

4. You haven't been employed in your field long enough.

 The lease option way of buying a home is ideal for someone just starting out in a career or is self-employed. Even though the T/B cannot qualify for a loan, do not have a large down payment or cannot make payments on a loan today they probably will be able to in a couple of years when it comes time to exercise their option.

5. You don't have a housing payment history, from either buying or renting.

This is another case where the lease option is an ideal solution to start the home buying process. If you have been going to college or living with your parents, you will not have a history of housing payments and while a seller will not care too much, a lender would want proof of least 12 months of good payments.

6. You can't afford loan payments at present.

 This is a problem that many potential buyers are faced with, and while it may be solved in a couple of years, you don’t need to wait. A lease option is ideal for this situation as the lease payments will either be lower than mortgage payment and you may be able to get a credit. As you advance in your career you will be making more money and when you can afford to make payments then is the time to exercise your option, probably a year or two down the road.

7. You can tie up a better property than you could afford to buy now.

 With a lease option you can tie up a nicer property than you could afford to buy today and when you can afford it in a year or two then you can buy it. If you were to buy a property that you can afford today, with a plan of buying your dream property in a couple of years you’ll be denying yourself the pleasure of living in the nice home during that time. Another problem with doing it this way is that most people would use a real estate agent to help them sell and in the process lose a large amount of their equity by paying a selling fee.

8. You may be able to take over a fixer with no up front cash.

 Normally you cannot go to a lender and get a loan on a fixer property, as they want it in good condition in case they have to foreclose on it. A lease option can often be used to take over a fixer property with no up front cash money. The option fee you don’t have to pay can be used to make the repairs. You might even be able to negotiate the rent so you can also put part of that money into repairs. By buying a fixer and doing your own repairs, you not only end up with a property that is worth a lot more than you paid, but you can fix it up just the way you want it.

9. You can get a credit on your lease payment and treat it like a savings account

 You can negotiate a credit on your lease payment and you’ll basically have the owner putting money in a savings account for you to use in completing the purchase of your home. With a lease option in place there are a lot of ways to do this, such as offering to make the payment early if the owner will credit you a portion of your payment.

 You could offer a higher than market lease amount and have the owner credit you this plus an extra amount depending on what you can negotiate or you could offer to do extra repairs or work on the property for a credit. Depending on the needs of the owner and yourself, there could be many other ways that you can build the savings account into a substantial amount to use for your down payment or deduct from the sales price.

10. You can treat the property as your own and fix it up the way you like.

One of the great things about doing a lease option on a property that you intend to buy is that you can decorate it or fix it up to exactly the way you want it. Although some owners will insist on approving whatever you do, the majority will not care as long as you’re improving the property.

11. You will have peace of mind knowing the home cannot be sold to anyone but you.

 You have probably heard horror stories about renters who fixed up the property only to have the owner turn around and sell it without even a thank you. This will never happen when you have a lease option as long as you keep up your end of the lease and option agreements between you and the owner.

12. You can take possession of the property quickly.

As you are aware, many things can happen between the time you agree to buy a property and when it closes escrow, so the term “time is of the essence”, is something that should be taken into account. One of the good things about a lease option is that you can literally move in within minutes after signing the lease agreement and option agreement, something that’s normally not possible when you buy a home in the regular way..

These are 12 of the principal reasons that a lease option makes sense to a very diverse group of people, especially in light of the real estate situation today. It will let many prospective home owners who thought they were out of luck get into a home today.

Ways to protect yourself with the lease option

 With the high rates of foreclosures and other distress situations that are prevalent today, you need to make sure to deal with a person who won't get into trouble and possibly lose the property. As a precaution you might want to think about putting the lease payments into an account and having the mortgage payments be automatically paid from it, to the lender each month.

Check to make sure the property taxes and homeowner’s insurance are current when you move in. You might also consider paying these through the payment account if they aren’t included in the mortgage payment.

 You should always use an attorney to draw up the lease and option agreements or at the least look them over before you sign them. If you need help finding a property, deciding whether it would be a good deal, negotiating the terms or any other aspect of the lease option it might be a good ideal to hire a consultant who is familiar with the process.

 Recording your option should be done. If your option was signed before a notary, you can record it with the country recorder in the county where the property is located, which will give the world public notice of your legal interest. Even If the option wasn’t notarized, you can sign an affidavit called a “memorandum of option” and file it with the country recorder in the county where the property is located.

 Keep in mind that neither one of these recordings create a lien on the property, but it does put a “cloud on the title” which would have to be removed before the property could have a loan put on it or for the title to be transferred, giving you a little more protection.

 Opening an escrow to do a couple of additional things would probably be a good idea. In escrow you can have them hold the signed deed and also order a preliminary title report to make sure there are no surprises with liens or anything else. With a signed deed the transaction can still be closed even if the seller died, disappeared or something similar. Even if you didn’t have an escrow it would be a good idea to at least have an attorney hold the signed deed, so that when you’re ready to exercise your option the deed is available.

 It would be terrible to work on getting your home for a couple of years and not be able to exercise your option to complete the transaction. This could happen because you couldn’t find the owner or worse that he had died and the heirs refused to cooperate unless you paid more money. A lot of times you have to pay an attorney to straighten it out.

Protecting yourself when property values are falling (like now).

 When prices are increasing it’s easy to place a price on the property a year or two in the future, but when the real estate market is like it is now, in most parts of the country, it’s near impossible. This is when you have to do some creative thinking. There are a number of ways you can protect yourself from getting buried if the market falls below what you predicted and are locked into.

 Here is one of the ways you can do it when conditions in real estate are like they are today. Instead of trying to guess what the value will be a couple of years down the road, just put a provision in the agreement that the final price will be determined at the time you exercise your option, without naming a figure.

  Put in the method that will be used to determine the value. This could be determined by an appraisal, a real estate broker price opinion, a combination of the two or whatever else the two of you decide. If this doesn’t work then you might have to bring in an arbitrator to decide what method would be the fairest to both parties. If it appears that this might be a problem, might want to find another property to buy.

 Another way you could do it is to put in a clause any time the value dropped below a certain figure you could walk away and get your option fee and any extra rent you had paid back. This will probably be a hard sell to anyone but a desperate owner. It would also be a reason not to spend any of your money on the property unless that was included in the refund.

 I’m sure this scenario would be rare as a seller wouldn’t want to give up the money and you would probably have to go to court to get it back. The only way this would be good for you, is if the money went into a escrow account of some type. Be very careful in a market that’s declining, unless the sale price will be low enough to cover the worst case scenario.

A way you might profit from the lease option.

 One of the great things about a lease option is the possibility of moving into a property with no money down and having a payment that is lower than what you would have to pay if you had a loan. Added to this, the fact that you don’t have to pay property taxes or homeowners insurance and you have the ingredients for either making a profit or living in a home that you could not normally afford.

 First of all you need to find a home in the better neighborhood, ideally one that needs some cosmetic repairs. The owner needs to be in a position where he’s somewhat desperate, is tired of spending money, needs to leave town or something like this and will listen to your proposal to do a lease option.

 If the owner agrees to a lease, then offer to do the repairs in lieu of an option fee. Figure out how much the repairs will cost and ask for at least double that as a credit toward the down payment. Offer to pay $100 or $200 over market rent but ask for at least 50% of your payment as a credit toward the down payment. You probably won’t get what you ask for but it doesn’t hurt to ask and the seller might surprise you. If nothing else it may make it easier to negotiate an amount the seller will agree to.

 When you put together the lease agreement and the option agreement be sure you put a clause in them that will allow you to sell or assign your interest in the property. Without that the deal won’t work nearly as well, because you now would have to buy the property before you could sell it to someone else.Here’s an example of what the deal looks like:

 The average neighborhood that you could afford in your town is around $250,000 so you’re looking for a property in a $400,000 neighborhood. To buy a home there would mean a down payment of $40,000 to $80,000 plus closing costs. The payments would then be about $1,800 a month interest only with taxes and insurance being an additional $400 a month. This means it would cost you at least $2,200 a month to live in this house.

 Even If you factor in the tax break you would still be paying about $1,700 a month after you put out $40,000 for your down payment. Let’s see what we can do with this same property using a lease option. We’re going to be looking at an ideal situation and it might take quite a while to find something that would work as will as our example.

 First off, if we’re lucky we’ll find one that needs some work. Let’s assume this one is in pretty good condition but could use paint, carpet, landscaping and some miscellaneous repairs. (This is the ideal type of property to key in on). The estimate to do this is $15,000, so we ask for a $30,000 option fee credit to be applied toward the down payment or off the sales price.

 The market rent for houses in the area is $1,400 a month. We offer $1,600 a month with a credit of $800 for every month we pay on time. The closer your rent payment is to the mortgage amount the seller is paying the more leverage you’ll have in getting a large credit. This is not a bad deal for the seller as he can use the extra $200 a month to pay his mortgage or what ever.

 Next you ask for at least a 3 year option to purchase at today’s value, unless the property values are falling, then you could use an appraisal or broker’s price opinion to set the price. Make sure you don’t get locked into a price that’s higher than the value at the time of exercising the option, although we won’t be the ones to buy the property.

As soon as you get the property under contract start looking for a T/B to buy your option. If you have gotten anywhere near what you asked from the seller, your option will be very valuable to the new T/B (tenant buyer). They will be needing to get a loan to actually buy the property so the credits will go a long way toward their down payment.

 Start doing the repairs on the property as quickly as you can, especially things like tearing out all the old carpet, preparing it for painting, starting the miscellaneous repairs and start doing some rough landscaping. Once you’ve done this you can take your time on the rest of the work as you’re hoping to find a buyer to finish it up. Many times it’s easier to sell a house when you do this than by leaving it in the original condition.

 If the new T/B was to do much of the work himself he could maybe spend $7,500 and have a credit of $30,000 plus if he had 24 months in before he exercised the option he’d have another $19,000 for his down payment.

 If you’re able to get this amount of concessions and credit from the seller I’d guess that a T/B would be willing to pay $25,000 or more to take over your position. Getting paid upfront would be ideal but you could also take a less amount upfront with monthly payments on the balance.

 Can you see now how a lease option could help you get into a home? I think you can see that if you are determined to own a home now instead of waiting for a year or two or even longer, a lease option will allow you to do it. The main thing you have to be aware of is, can you qualify for a loan in the time that you have an option for. You need to be realistic about this or it could cost you a lot of money and time.

This would be a good time to talk with a consultant or other neutral 3rd party and take a good luck at the numbers. Don’t use figures that are hard to substantiate. Be honest with the consultant and yourself. If it looks iffy then maybe you ought to practice to see if you could actually do what you would have to do to make a lease option work.

  Just stay where you are and for the next 6 months practice what you would have to do to be able to qualify for a loan. Figure out what you would have to achieve by the end of the option period. Divide this by the number of months in the option period and then see if you can if you can do it for the 6 months. It probably won’t take but a couple of months to see if you have any chance at all of making a lease option work for you. If it does work out you’re ready to commit to a lease option, but if it doesn’t you haven’t really lost anything.

 2. Lease Option A Little Money Into Real Estate Millions  

Do you want to start investing in real estate but you don’t have much money? Is your credit such that you can’t borrow any money? The answer to these questions can be simple. By using a lease option you can start investing today.

 Lease option is the short term for lease with option to purchase. Other names for it are rent to own, rent to purchase, lease to own, lease to purchase and others. What all of these mean is that a person is leasing or renting a property and paying a fee to have the exclusive right to purchase within a certain time frame.

 The way a lease option works is you find a property whose owner is willing to lease now and sell later, sign a lease agreement for an agreed upon length of time and pay a fee for an option to buy the property within an agreed upon time.. If you can't or don't want to buy it then you forfeit your option fee and any rights to remain in the property.

 The lease option has a number of good things for both the buyer and the seller which makes it an ideal investment vehicle. It's a great way for even someone with less than perfect credit and not much money to become a successful real estate investor.

 The hardest part about investing with a lease option is finding a suitable property. The main problem is that property owners don't understand how a lease option works and many aren't willing to learn. Some think you are trying to take advantage of them so will refuse to consider a lease option.

 Another problem is finding a property that makes sense. In today's real estate market most properties, whose owners would consider a lease option, have more debt against them than they are worth. The payments are also higher than what can be collected for rent so it isn't a good deal for the owner. If it's not a win win situation you had better just walk away and keep looking.

 Some of the benefits for a prospective real estate investor using a lease option are:

 1. Normally the option fee is a relatively small amount that’s negotiated between the owner and prospective buyer.

2. The option fee doesn't have to be cash. It can be labor, services, vehicles or just about anything of value.

3. Credit doesn't have to be perfect. The buyer will have the time during the option period to work on it.

4. Time to work on other issues to get a loan, such as down payment, time on the job, rental history, etc.

5. Its possible to negotiate a credit from the lease payments to apply to down payment or toward the sales price.

6. Doesn't have to complete the purchase, but will forfeit option fee, any improvement to the property and credits.

7. Can treat the property as your own and possibly make improvements with owners consent.

8. The owner can't sell the property to anyone else as long all the conditions of the contracts are met.

9. Put wording in the contract to be able to sell the option or put a renter or future buyer in the property.

10. Put a sub-lessee in the property at a higher rent amount than you are paying

11. Can take control of the property as soon as the agreements are signed, no long wait to close.

With all of these benefits it looks like the investor is getting the better part of the deal but not so as we'll see from the owner's benefits below:

1. The sales price is usually at or even a little over market value depending on the economy.

2. The owner knows he has a sale in the future.

3. Lease payment is usually higher than market rent. The owner can use it or credit in return for on time payments.

4. The owner gets a tax free option fee that he can use immediately along with the increased rent amount.

5. The owner knows the property will be cared for as the tenant is going to buy it.

6. The tenant usually pays for repairs up to agreed on amount such as $200.

7. Basically the owner can now walk away from the property without worrying about it.

As you can see this is a winning situation for both the owner and prospective buyer. When you approach an owner use the above benefits to show him what a good deal a lease option would be for him.

 Lease options are great because you can control as many as 10 properties with the same amount of money you would have to use as a down payment on just one. Instead of spending time saving for a down payment and possibly having to work on credit issues you can begin investing tomorrow. All it takes is a newspaper or computer, a telephone and the information you'll find in this and other articles here in my blog.

3. Get A Home With Lease Option, No Matter Your Lack Of Credit Or Money

You may be among the thousands of people out there who would like to buy a home but for various reasons can't.The reasons could be bad credit, no down payment, not enough time on their job, not earning enough to makepayments, etc. These reasons are not as important when you use a lease option or rent to own to get into a home.

With the lease option you will have a period of time (The length is negotiable but make sure it’s long enough) to:

1. Clean up your credit. If you've had a bankruptcy or a foreclosure you're probably going to need at least 2 years from the occurrence to qualify for a good loan. If your bad credit is more about late payments then you'll need at least a year plus whatever time you think it will take to clear them. With tax or other liens you might need up to 3 years to pay them off and get clearances.

2. To save the amount you need for your down payment. Make a budget and make sure you could save that amount during the lease period. Even if you aren't able to save as much as you'd like you can still get a loan, although it may not be as good as you'd like. Don't be too optimistic because things happen especially if you have a young family.

3. Most lenders want you to have a least 2 years in the same field so if you just changed fields be sure you have 2 years for the option period. If you have just changed fields you may be exemped from that if you have a solid employment contract.

4. If you're not making enough money to make payments now, you'll have to make some educated guess as how much you'll be making at the end of the option period. Here again give yourself plenty of time to reach the needed amount.

5. Make sure that if you're counting the wifes income that there isn't a period when she won't be able to work. Unfortunately this is not something that can be predicted with certainly so be careful estimating her income.

6. Lenders usually require at least a year of on time mortgage or rental payments so be sure the options covers that amount of time.

As the name implies the lease with option to purchase is a two part agreement and consists of two separate contracts. The first is a standard lease or rental contract spelling out terms and conditions such a length of the rental term and rental amount per month or period. The second part is the option agreement which gives you theright to purchase the property for a specific amount, the length of time the option runs for, the amount or type of option fee, if there is an amount from the rent credited toward the sales price or downpayment and how much it will be. There are usually some other conditions included in this contract especially if a lawyer is involved, which you as the buyer should want.

There are a number of benefits that make the lease option such a great vehicle for the credit or cash challenged buyer such as:

1. Instead of needing a large down payment, there is normally a smaller option fee. There is also a possibility of doing work on the property or some similar type of arrangement instead of an option fee of all cash. A cash fee would be credited toward the down payment or sales price and depending on the amount of work an additional amount might be subtracted from the sales price.

2. No need to have great credit because you'll be working to repair your credit to qualify for a loan during the lease period.

3. Not having to worry about being on the job a certain length of time, having a minimum amount of money in the bank or some of the other requirements lenders have.

4. Being able to treat the property as their own and able to fix it the property up like they want within reason. Usually the owner won't care what you do to the property as long as its an improvement. Check with them first though.

5. Having several years (negotiable) to get ready to qualify for a loan.

6. Peace of mind knowing the property can't be sold out from under you and that you are the only one that can buy the property as long as you obey all the terms and conditions of the lease and option contracts.

7. The possibility of being credited with part of the rent payment toward the sales price or down payment which can be a part of your savings for your down payment.

8. Circumstances may change and the buyer might not be able to exercise his option. The good thing about the lease option is that he can walk away at any time. Some of the reasons to not exercise his option might be a job transfer, not liking the area, the property value declines or any number of other reasons. Of course he’ll lose his option fee; any rent credits the owner may have given him and won’t be paid for any improvements he may have made on the property, but he won’t have any other obligations to the owner.

9. Normally the property price is negotiated when the lease option is signed which means the buyers are hoping the price increases. Of course if it declines the buyers don't have to exercise their option. Try to figure out what the property will be worth at the end of the option period and negotiate accordingly.

Now is the time of the real estate cycle that anyone who hasn't been able to qualify to buy a home should really start checking out the possiblity of using a lease option to get into their own home. Hopefully you can see why a lease option is such a great tool for a whole range of buyers. Ask questions about anything you're completely clear on. Make sure you understand exactly how to this works before jumping into it. Here are a couple of good guides that will steer you through buying with a lease option and make it a good experience for you.

Click here Lease Option-Buy Property With No Money Down to get more information.

Click here Lease Option-Best Kept R.E. Investing Secret to get more information.

 4. Renting VS Rent To Own When A House Won't Sell

If you're like a lot of other sellers you're in the process trying to figure out how to keep your property out of foreclosure. Maybe you're at the point where you realize that you can't lower the price anymore or the sales amount won't pay off the loan and besides it's probably already overpriced.

Possibly you just got the news that yet another prospective buyer couldn't get a loan and your real estate salesperson basically says they can't do anything more. You don't have the money to continue making the payments so you have make a decision that won't destroy your credit, so walking away is not an option.

As bad as you hate the thought you decide maybe you need to get a renter, even though the rent won't cover the loan payments and they will probably tear the place up. Take heart because there is another choice and not only could this one bail you out it might even make you money down the road.

It's called the Lease With Option To Purchase or the Lease Option and most of the time Rent To Own.

The way it works is this: You have a Tenant/Buyer (T/B) who agrees to lease the sellers property for an agreed upon amount for an agreed upon period of time and gives the seller something of value for the option or right to puchase the property for an agreed upon amount for an agreed upon amount of time.

There are a lot of good prospective buyers out there who don't have tens of thousands for a down payment and whose credit is not good enough today to go out and get a loan today, but they probably could in a year or two.

Here's how this will help you out of your predicament: Find a T/B (maybe one of the ones who already like your house) who has at least 3% of the selling price for an option fee, is willing to pay a little over market rent and a little over market price for the chance to be a home owner.

For an example if the house was worth $200,000 you would sell it to them for $220,000 and because you don't need a real estate person you will make an addition $10,000 to $12,000. The T/B will be happy to pay extra rent when you tell them that you will credit them part of the rent back to use for their down payment, when they pay on time.

They will also be agreeable to do any repairs up to an agreed upon amount to be able to treat the house like theirs, which is good for you because they won't tear it up.

Doing a rent to own/lease option could solve your problems because you'll have up front money to pay on the loan payment if the lease payments don't cover it. Because you're getting higher than normal rent it may cover the payments or get real close. You won't have any repair bills, because most T/Bs keep the property up and usually improve it.

If the T/B decides to not purchase the property you're entitled to keep their option fee and extra rent and you can do it all over again. All in all this is a win win position for both seller and T/B.

5. How to Safeguard Your Real Estate Lease Option
Don Levy

Lease with option to purchase is one of best ways for the home buyer with little money and not so perfect credit to actually be able to buy a home in today's tough real estate times. One of the few negative aspects of a lease option is when a seller won't live up
 to option contract that he agreed to. You can always sue the seller and force him to sell you the property but take it from me it can cost a lot of money in legal fees and sometimes take years to accomplish. The last one I was involved in went to arbitration and cost me an extra $50,000 and almost a year to purchase the property after my attorney gave me what I believe now was bad advice.

To keep bad things like this from happening to you here are three ways you can safeguard your lease option and purchase the property without problems and for the agreed upon price.

1. Record Your Option - Make sure you sign your option in front of a notary public and you can then record it in the public records at the county recorders office. Even if you didn't have it notarized you can still record a "memorandum of option".

You just need to sign an affidavit and then you can record it. While recording an option doesn't create a lien on the property it at least creates a "cloud" on the title which would have to be removed in order to get title insurance. It would make it difficult for the property to be sold with the cloud on it.

2. Put Your Option In An Escrow - Putting a signed deed in an escrow with a title or escrow company is a good idea. Not only will it be easier to deal with a seller who balks at transferring the property as he has already signed the deed. The main reason you use it is if for some reason the owner can't sign the deed (he died or disappeared) you just need to give the money to the escrow officer and pick up your deed.

While I have used the first two safeguards the third one is a new one on me. I found it while researching this article at the Real Estate Investors Club. It was written by William Bronchick, who is a noted real estate attorney and I included it here verbatim.

3. Record a Mortgage. "Typically a mortgage is recorded to secure payments on a promissory note. A mortgage can be recorded to secure performance of any agreement, even a purchase option. You as optionee (buyer) will now be a lien holder, in the same position as a secured lender. If
 the seller refuses to sell the property, you foreclose. Now the seller has to go to court to protect himself, rather than the other way around".

The above safeguards are for the buyers benefit rather than the sellers. Below you'll find safeguards for one of the problems a seller can face when a tenant/buyers defaults and won't leave like they originally agreed to do. The problem is called an equitable interest in the property. When they go to court their lawyer claims that the lease option was not a landlord/lessor and tenant/lessee relationship but rather a seller and buyer one. If they convince the judge that they are right you will have to foreclose on them rather than just evicting them. As you know foreclosures cost a lot of time and money so you need to make sure you have a lessor/lessee situation. Below you'll find tips about the things you must do to prove this in case you end in court.

1. Separate Lease & Option Agreements - Your lease agreement should be separate from the option agreement and should not mention the option at all. Be sure to use a regular lease agreement instead of a combination one.

2. Option Periods - Keep the option periods short, not more than a year at a time. If they need a longer periods, give them a right to renew at the end of each year. Each time you renew the agreement make a new lease and option agreements. You will also want to raise the rent and increase the sales price especially if you are giving an ongoing rent credit.

3. Security Deposit - Designate part of the option fee as a security deposit. This will make it look more like a lessor/lessee agreement rather than a sale.

4. Taxes and Insurance - Never let the tenants pay the taxes or insurance as it makes it look too much like a sale.

5. Rent Credits - Judges have been known to base equitable interest on the amount of equity a tenant has. Keep the rent credits small to avoid this.

6. Agreement Language - Some words that you must never use in the agreement are ones such as credit, buyer or seller. Instead use words like non-refundable option fee, lessor, lessee, landlord or tenant.

It doesn't take much to protect yourself in a lease option situation whether you are a tenant/buyer or a seller. It will be worth the extra cost to have a real estate attorney draft the agreements, especially the option one as that has the most pitfalls
 for the seller. Make sure you have your attorney look over any documents before you sign them and then follow the safeguards above for a smooth lease option purchase or sale.

6. You Can Buy A Home Now-Use A Lease Option

 To get more information about lease options & other types of real estate visit our blog at http://healthy-and-wealthy-now.com/realestate