Mark Maupin Explains That Options Are Being In Used As Sales Tool for Investors
“A great way to find a buyer for your investment home
(EMAILWIRE.COM, March 17, 2008 ) Livonia, Mi-- Options can give investors the "best of both worlds" between a land contract (called Contract for Deed in some States) and a rental. With an option, you are renting the house with the right for the tenant to buy it later at set price and terms. The tenant/purchaser pays an additional sum over and above the rent each month which is later applied to the down payment when the sale closes. The sale can be in the form of a land contract or mortgage.
AN EXAMPLE
You are planning to sell a house that would rent for $475.00 per month. The house is worth about $30,000.00 cash. You write an ad as follows:
RENT WITH OPTION TO BUY
3 bedroom house, quiet area,
CALL: (313) 555-4546
Investors will be amazed at the amount of responses any ad starting with "Rent with option to buy" will bring. Let's assume that you would like to sell the house for $38,000.00 with $4,000.00 down on a land contract.
They pick one of the applicants who would like to buy the house, but they only have $1,600.00 to put down. This is where the option comes in.
They take their $1,600.00 as initial option consideration and tell them that they must pay $475.00 per month plus $100.00 for one year in addition towards their down payment. You will match their contribution of $100.00 per month. You now have $1,600.00 in hand which is their’s to keep plus they are receiving $575.00 per month on a house that would rent for $475.00. Isn't this better than a regular rental?
Assuming the tenants pay right along for the year, they close and they are now purchasing on a land contract. The tenant had a year to establish their payment track record and will probably have ended up with a good purchaser on the land contract.
Think about it. Isn't the tenant/purchaser more likely to be willing to pay a little more than market price for the home? Of course. Where else can they get into another house with only $1600? Also, since they will be buying the house, you will make them responsible for all of the repairs while they are renting with the option. They will stop thinking of the home as yours and start thinking of it as theirs. They will start to show "pride of ownership".
The end purchase can also be in the form of a mortgage. However, you should consult with a loan officer before completing the agreement as certain mortgage guidelines might prevent you from using option consideration for a down payment.
For agreements and courses on lease options go to www.MrLeaseOption.com or go to http://MarkMaupin.biz for more information on Mark Maupin.
Email: Maupin.Mark@gmail.com
Phone: 248-939-6232
