Advantages And Disadvantages Of Lease Option Real Estate Investing

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Lease option real estate investing is a creative way to get started in real estate investing. The biggest advantage of this investing method is “control”. It basically gives the investor the right to possess– be in control of– and profit from a property without owning it.

A lease option contract is a combination of two documents. The lease part is where the owner agrees to let you lease their property while you pay them rent for a stated period of time. During the lease period the owner can not raise the rent, rent it to anyone else, or sell the property to anyone else.

The option part represents the right you purchased to buy the property in the future for a specific price. If you decide to exercise your option to buy, the owner has to sell it to you at the negotiated price. The option part of the contract obligates the seller to sell to you during the option period- but it does not obligate you to buy. You are only obligated to make rental payments as agreed during the lease period.

When the lease option contract is written and structured properly, it can provide tremendous benefits and advantages to the investor. If the lease option includes the “right to sub-lease” the investor can generate a positive cash flow by renting the property to a tenant for the duration of his lease, or lease option the property to a tenant-buyer for positive cash flow and future profits. If the lease option includes a “right of assignment” the investor could assign the contract to another buyer for a quick profit.

Lease option real estate investing, is a flexible, low risk, highly leveraged method of investing that can be implemented with little to no money.

High Leverage

It is highly leveraged because you are able to gain control of a property and profit from it now–even though you don’t own it yet. The fact that you don’t own it also limits your personal responsibility and liability. Only if you decide to purchase the property by exercising your “option to buy” would you take title to the property.

Little to no money

The investor’s cost to implement a lease option agreement with the owner requires little to no money out of pocket money because it is entirely negotiable between investor and owner. There are a variety of ways the option fee can be structured such as an installment plan, balloon payment or other agreeable arrangement between both parties. The option fee can even be as little as $1.00. In order to secure the property for purchase at a later date, tenant-buyers typically pay a non-refundable option fee of approximately 2%-5% of the negotiated purchase to the seller. Depending on how the lease option agreement is written and structured, the investor could possibly use the tenant-buyer’s option fee money to pay any option fee owed to the owner.

Flexible

It is a flexible method of real estate investing because terms of the agreement like payment amounts, payment dates, installments, interest rate, interest only payment, balloon payments, purchase price and other terms are all negotiated between seller and buyer. Responsibilities of both parties are also negotiable. For instance, if the investor doesn’t want to act in the capacity of a landlord, he could specify in the lease option agreement that tenant-buyer will be responsible for all minor maintenance and repairs and the original seller will remain responsible for any major repairs.

Financially Low Risk

It is low risk financially. If the property fails to go up enough in value to make a profit, you have the purchased the right to change your mind and let the “option to buy” expire. Even if your tenant-buyer decides not to buy the property, you have profited by a positive monthly cash flow from the tenant-buyer’s rent payments and upfront non-refundable option fee.

Let’s look at an example of a lease with option to buy structured in a way that the investor profits in 3 separate phases of the investment.

Profit #1 non-refundable option fee

Future sales price negotiated with the current owner is $125,000 with an option fee of 2% of the sales price. Option Fee you owe the owner is $2,500. The future sales price you set for your tenant-buyer is $155,000 and the option fee is 4% of the sales price. Option fee the tenant-buyer owes you is $6,200. You collect $6,200 from tenant-buyer and pay $2,500 to the owner and your profit = $3,700

Profit #2 cash flow from monthly rental payments

The Monthly rental payment you negotiated with the owner is $1,000. You set the monthly payment at $1,250 per month for your tenant-buyer. Each month you collect $1,250 from your tenant-buyer and pay the owner $1,000 each month. Your profit is $250 monthly positive cash flow during the lease period.

Profit #3 is set up when the lease option contract is initially written

The difference in the negotiated future purchase price with the owner and the future purchase price set for your tenant-buyer. Let’s say the property goes up in value to appraise for at least $155,000. Your tenant-buyer decides to exercise their option to buy. You buy the property from the owner at $125,000 and then sell it to your tenant-buyer for $155,000. $155,000 – the $125,000 you pay to the owner = $30,000 profit.

Of course the key to making lease option real estate investing work, is finding motivated sellers and buyers. Finding these motivated sellers and buyers shouldn’t be difficult. The continuing down turn in the real estate market has created a large number of sellers who can’t sell their property and also buyers who can’t get financing to buy. The seller could possibly get a fair offer to be paid in the future by selling their property to a real estate investor on a lease option basis. A potential tenant-buyer could obtain home ownership without having to qualify through traditional home loan guidelines.

One disadvantage of lease option real estate investing involves the tenant or tenant-buyer possibly defaulting on monthly rental payments. This would make it necessary for the investor to come up with money out of pocket to pay the owner and possibly have to proceed with eviction process. However, there are certain provisions and clauses that can be written into the lease option to deter buyers from defaulting on payments.

If the investor fails to do “due diligence” before entering into a lease option agreement, he could end up with a property that is unmarketable. There could be a number of liens on it, issues involving ownership of the property or it might be in foreclosure. By diligently performing research before entering into a lease option agreement, the investor can avoid these mistakes. A few things the investor could do is– perform background and credit checks on both the seller and buyer, search public records in reference to ownership and property status, or do a title search.

Despite the few disadvantages, lease option real estate investing continues to be an excellent way to invest in real estate with little to no money and low financial risks. It also remains to be an excellent way to gain control of a property you don’t own and create positive cash flow and profits on flexible terms.

Bottom line, the secret to success in today’s challenging real estate investing market is to use only the best creative ideas, proven tools and strategies that have been successfully used by other investors to generate cash flow and profit from today’s real estate market. The more you understand and apply now, the more you will profit from today’s financial crisis.

The Good Reasons To Get Alabang Manila Real Estate

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Newbie home owners get lots of selections to pick from in Manila real estate. Right up north, several of the best properties are positioned in Makati in addition to the Fort Bonifacio Global City, in which high-end houses and condos are increasing. For people who prefer the easier way of living in the south, Alabang is the perfect area, and an Alabang house just might be perfect for them. The location just provides quite a few benefits, a number of them present as a consequence of recent heritage.

Alabang is actually an important part of the metropolis of Muntinlupa, which includes an appealing historical past. In 1869, the metropolis (then a municipality) was created by the Spanish colonial government. Within the pursuing American control, the land was juggled in between a couple of provincial ownerships, Rizal and Laguna, during 1901 to 1905. Municipal self-sufficiency was granted in 1918, which ensured that they could have their officials. Strangely enough, Vidal Joaquin, a local of Alabang, was the very first appointed mayor. In 1975, the area legally became a part of Manila real estate.

True progress, though, didnt occur till the 90s, while Filinvest and Ayala Land both decided to put money into the property. An office in Manila located here can currently be seen in destinations just like the 244-hectare Corporate City and the Madrigal Business Park. These types of locations stand for several of the perfect commercial real estate in the land.

In addition there are several Manila real estate non commercial selections in the region. An Alabang house could be certainly one of the finest purchases you may come up with, and a number of the most excellent ones can be obtained in its fashionable villages including Alabang Hills, Alabang 400, Ayala Alabang, and Pacific Village. These kinds of houses in Manila could be very expensive, yet the highly exclusive subdivisions that they are usually in offer 24-hour security and conveniences like gyms and function buildings.

Precisely what is waiting for somebody who determines to purchase Manila real estate in Alabang? The areas fast development into a quite contemporary environment has triggered its affluence. Its set to be at par with Makati in terms of corporate ventures. Beginning workers can certainly stay here to lessen the problem of journeying to the office. Doing work in the southern part of Metro Manila can certainly be a delight, and a lot of large companies currently have an office in Alabang.

An Alabang house furthermore provides some strengths not conveniently accessible to various other types of Manila real estate. Selected organizations similar to the Asian Hospital and Medical Center, which is competing for the title of most effective medical center in the country, are nearby, supplying accessibility in situations of medical problems. The Alabang Town Center also delivers many treats for leisure at any time. This vast shopping center is only several minutes from the regions significant business enterprise centers and non commercial communities.

This specific place in Muntinlupa offers a few extremely classy strengths for the whole family. Workers will enjoy the comfort of doing work in its brand-new business office complexes. Seeing a motion picture or having meals with friends is furthermore made easier right here. Definitely, houses in Manila positioned in Alabang might be the ideal option in Manila real estate.

How National Trends in Luxury Real Estate are Impacting Orange County

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Recent coverage of the luxury market at events like the National Association of Real Estate Editors conference has highlighted the market’s strong resurgence and steady sales. In fact, statistics from the National Association of Realtors suggest that the luxury market is rebounding from the recession faster that middle market and lower-end properties. All signals point to great news for luxury owners that may be considering a property sale in the near future. If you are contemplating listing a luxury property in the Orange County area, what you learn may surprise you.

What is considered a luxury property is changing: Today, a luxury property in many metropolitan areas begins at about the $4 million dollar price point or more than 3500 square feet of space. In more rural areas, the price point for what is considered a luxury property starts around the $500,000 mark. There is further differentiation regionally and even on a town by town basis. In competitive markets such as Orange County, the prices may be higher than anticipated.

Practical features are coming at a premium: When people are contemplating buying a luxury property, they typically ask fairly standardized questions about luxury amenities. Is the kitchen gourmet? Does the house feature a stunning view? But more and more, luxury Realtors are seeing the importance of what can only be dubbed -practical features.- For example, generators are one key trend throughout the country as more areas are affected by hurricanes, storms, and other inclement weather. More concern has also been show about factors such as privacy, safety, and exterior builds to protect cars and other possessions during weather events. Buyers still want traditional luxury amenities, but it is important that safety and emergency infrastructure has also been addressed at the property level.

Luxury townhomes and condominiums are on the rise nationally: A recent piece in the New York Times highlighted the trend of the growing luxury condominium market. While the piece focuses on the New York market, it underscores a trend that is taking hold nationally. More and more people are looking for luxury-level accommodations with the benefits and flexibility of condominium living. Some luxury home owners are even evaluating whether or not their homes can be divided and sold as condos to maximize profits. The success of this approach depends greatly on the home’s location, zoning laws and overall layout and design.

Lifestyle features are playing an increasing role: Another trend that has been noted is the importance of lifestyle features in luxury property purchases. Lifestyle features could be as simple an inside/outside design that allows more flow between a home’s interior and exterior spaces. In other cases, it is more specific to aspects like waterfront or riverfront property. Many buyers are also looking at factors such as golf course access, high end club houses, and other luxury community amenities.

Non-traditional buyers are entering the pool: While the prospective pool of buyers for luxury properties is more limited than for mid-tier homes, there’s been an increasing diversification within the luxury market. Many owners are finding offers coming from buyers that contemplate transforming the space into retreat centers, upscale boarding schools, and even wineries, thus opening up advertising opportunities for Realtors and owners alike with truly unique properties.

The luxury market is thriving in areas of the country such as Orange County. Staying on top of trends helps sellers to make the right decisions regarding their properties. The first step in the sales process is finding an experienced luxury real estate agent that understands your local market and can guide you through the process.

Airwil Intellicity – Commercial and studio apartments

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Airwil developing India is better known for streamlining the realty sector since its origin. Airwil setting the trend for modern, luxurious and convenient living that is a prime location with modern amenities and a comfortable lifestyle, Airwil Group one of the fastest growing real estate development corporation in Delhi and National Capital Focusing in Noida and Greater Noida West locations. The real estate market in India is at a peak point with popular cities like Noida and Noida Extension witnessing real good growth in the property business. Real Estate in Noida has become a favored choice among property buyers living in and around the country. Especially Noida City; where the property market has come up consistently well over a period of time. Today property buyers are seeking for investing in more than one property in Noida City. Many Noida and Noida Extension developers have changed the real estate scenario of this city. Noida Extension properties not only hold a place for the rich peoples, but also for the middle class peoples who seek for a comfortable living space. So, Airwil Intellicity is new commercial and residential project, developed by Airwil Group. There are many residential and commercial projects in Noida and Noida Extension. Airwil Inteliicity is located at Noida Extension or Greater Noida West with spread over 25 acres of land. Intellicity Noida is offering business shops and space, living spaces, rental and retail shops, office spaces (A-Wings and B-Wings) and studio apartments. A project with commercial space, landscape podium residential complex, grand club house, health facilities, play area, imposing garden, security, broadband internet, community hall, gymnasium, outdoor games like tennis court, badminton court, basketball court and much more that offers you all pleasures of life. The project -Airwil Intellcity Noida- emerged as lavished living apartments which come with outstanding architecture, modular interiors, composed and secure residential surroundings in the heart of Noida, Noida Extension. The interiors of these premium apartments are designed keeping in mind optimum daylight provision, utmost security and safety provisions and best living and office space infrastructure. Indulge and delight yourself in the natural green landscape with the refreshing fragrance of exotic flowers. The project is beautifully characterized by the greenery which enhances the beauty of smarty designed Airwil Intellicity Noida Extension. In a short span of time, Airwil has developed luxurious residential complexes, townships, family entertainment centers, business offices and commercial complexes. Airwil understands the importance of quality and ensures the best of technology, planning, design, timely possession and construction for all of its projects.

For More Information and Details for Booking @

Call – + 91 – 9560090081

Website: http://www.intellicityairwil.in/

Florida’s New Laws Spell Significant Change for the Real Estate World

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July 1st was a pretty big day for Florida – over 150 different new laws were put into effect, many of which will have a significant impact on those who own and rent homes not only in the metropolitan Jacksonville area, but all across the state.

Here are a few of the major highlights of these laws and what they might mean to you:

According to new Florida Law HB77, there are new provisions that make it easier for landlords to evict tenants who only make partial payments on their rent. Now, when a tenant makes a partial payment, they only have a matter of DAYS to pay the remaining balance before eviction proceedings can begin.

According to this same law (Florida Law HB77) there is a new two strikes and your out policy. This means that if a tenant breaks rules of their lease (like parking violations or having unauthorized pets) two times in ONE year, they can be evicted.

Not all of the laws were negative, though. One law, Florida Law SB342, eases homestead exemptions for those who have a homestead exemption but need to rent their homes temporarily. This does NOT allow for long-term leases or rentals, but can protect some homeowners who find themselves in temporary binds (up to one month of rentals per year.)

Another Florida Law HB87 also makes some significant changes to the foreclosure process here in Florida, where we have the highest number of foreclosures in the nation. This will do a number of things, including placing a greater burden of proof on lenders when it comes to tracking and maintaining the ownership and default status. It also drops the statute of limitations for banks to go after foreclosed owners and judgments from five years down to one year.

What kind of difference will these laws have on you and your home? Does this introduce any new obstacles to your retirement plans? Or, perhaps this opens up a few opportunities. Regardless of whether these changes bring about good or bad tidings, it’s certainly time to take a careful look at your own particular real estate circumstances to see if adjustments need to be made.

If you’re not sure, that’s a fairly safe indicator that it might be time to seek a little advice from the professionals. Consult with a local real estate lawyer, real estate agency or property management firm to find out how this could affect you and your greatest investments.