:help:Can someone explain Lease Purchase to me? and can interest be added to a lease purchase. ???
thank you
Hello from here n Florida!
Lease option in Real Estate works the same way when leasing a car.
Example; 100,000 property, 1,000 month 2yr buy out from
seller
You the investor signs this property up lease option with the seller saying to cash them out in 2yrs and during that time you collect up front option money from your tenant buyer which is usually around 3 to 5% of value of home.
The trick is locking the best price in with your seller 100,000 ,selling to tenant buyer at 120,000 and charging say 1250 month giving you a 250 cash flow plus a nice upfront option deposit. Real Estate appreciates and cashing your seller out in 1 yr since you always give tenant buyer less time than seller at 100,000 and you can figure out where the rest goes.
So you have collected an extra 250 a month for 1yr and have a 5,000 option to buy deposit which is yours to keep even if tenant buyer does not buy. Not to mention the 20,000 you have made from holding onto the property for 1 yr capitalizing on the appreciation of real estate cashing your seller out at the locked in price of 100,000 1yr ago…
Hope this helps…
Hi Mozingo,
Your last post was very insigtful. I’m in the learning phase and hope to be ready to take the next step in another month or so.
I have one question for you. I’m a little confused about the actual “selling” of the property transaction. Once I have signed the lease/option and found tenants, if they are ready to buy at 1 year, what is the process to buy out the original seller? If the original owner finances, this makes it easier, right? Not sure how this works.
Is this what is called a “double closing” (when I buyout the original seller and a few minutes later, my tenants buy me out)? Just trying to get a very clear understanding. ;D
Thanks for your help!