Lease Options Are GREAT for Home Buyers and Investors

By Max Suther 

Many people want to buy their first home or make their first real estate investment but don't have that much money. Using one simple technique can make buying a home for little money down easy. 

A lease option is basically two real estate transactions. The first is the lease. The lease is much like any other lease. The other part is the option to buy the home at a certain price within a certain amount of time. For example, you have the option to buy a home within the next year for $100,000. For this right you will pay an option price. The price might be as low as a dollar or a few thousand dollars. So basically you will lease a home and also have the option to buy the home. So let’s see how a home buyer uses the lease option to buy a home. 

First you will need to find a seller who is interested in this type of deal. Typically you will need a desperate seller. This is a person who needs to sell their home fast. There are several ways to find desperate sellers. The first is by using a real estate agent. Ask the real estate agent to look for expired listings or listing that are at least six months old. These people have tried to sell their home but for some reason have not been able to. 

Second you need a real estate agent who understands lease options. You want the agent to make an offer to buy the home using a lease option. For example, let's say that you want a home that is $200,000. Your agent should make a full purchase price offer for $200,000 with an option to buy within two years. Let's assume that the payment for the seller is $1500. You will offer to lease the home for two years at $1600 dollars. The seller wins by selling his home at the asking price and by making $100 dollars extra a month. You win because you are able to buy the home within the next two years for $200,000. So if you buy the home for $200,000 at the end of the two year period you will already have made some equity. Both you and the seller win.