Today, the real estate market remains well poised for using a lease option contract to both buy and sell houses. Investors bring in more prospective buyers using the lease option contract and sellers lock in today's low selling prices.

Investors want to use a lease option contract to derive the highest possible income from their invests today, while bringing in a buyer for a future sale. The rental market has been hot for a couple of years with rents continuing to rise for the foreseeable future. Compound this with the fact that buyers can't qualify for a loan and you have the right mix to maximize your rent and help buyers qualify to buy in the future based on having equity in the house and a proven payment history. Opening the sale to a lease option contract brings in more potential buyers that drives the selling price to it's maximum.

Lease option contracts work for buyers for mostly the same reasons. They can't qualify for a loan today but they want to be homeowners nonetheless. A Lease option contract is about the only way buyers can lock in a low price today and begin the process of positioning themselves to qualify for a lease in the not too distant future.

Tip #1 - A lease option contract MUST be two separate contracts

Lease Option Contract - Tips for Avoiding Future Problems

Investors using a lease option contract several years ago probably remember that the lease contract and the option contract were written as a single contract. Live and learn. Today, more sophisticated investors are writing the lease and option contract as two separate documents. They are also being more careful with the terminology and phrasing of the documents.

The reason being is that based on a single document and the wrong phrasing, courts have interpreted some lease option contracts to give the buyer equity in the house. The legal process to remove a problem tenant becomes more of a time consuming and costly foreclosure process than an eviction or refusal to renew a lease. And you may have to return some money. For that reason, you must use two separate documents that combine to form the full lease option contract.

Words that you want to avoid are "credit", "seller" and "buyer". Especially in the lease document. Instead, use the standard terms "security deposit", "landlord", and "tenant". If the security deposit will be applied towards the down payment, you can make explain in detail, in the purchase option document, how it will apply only when the purchase option is executed. This should not be mentioned in the lease agreement.

Be clear in the purchase option document that the "potential buyer" receives no equity in the property until the purchase is fully completed. Getting this part wrong is were you run the risk of a court interpreting your lease option contract as converting the nonrefundable option fee into equity for the potential buyer.

The other goal of writing separate documents is capturing all agreements in writing by creating a detailed lease option contract. A clearly spelled out purchase option agreement also helps the potential buyer obtain a mortgage when the time comes. This happens when it's clear exactly how much equity in the property transfers to the buyer. A typical lease option contract transfers equity in several ways. The purchase option fee is credited as equity, part of the above market rent transfers as equity, and any appreciation in value of the property becomes equity. All combined this can be enough to qualify as the down payment to obtain the mortgage that both the seller and potential buyer want to happen.

Document the fair market rent at the time the lease option contract is signed. It can be difficult to document fair market rent after a few years have gone by. In addition to the fair market rent, be very specific how much of the above market rent becomes part of the down payment and any conditions that cause it not to apply.

Let's assume it's agreed that fair market rent is $800 per month and the above market rent being paid is $1,100. State that the difference of $300 will apply to the down payment only if the purchase option is executed. If the purchase option is not completed, the excess rent compensates the landlord for not being able to sell the property during the option period. The same thing applies to the nonrefundable option fee.

Make the agreement is all inclusive. If the above market rent does not apply in months that tenant is more than four days late with the payment, clearly spell that out in the lease option contract.

Other Lease Option Contract Tips

As the seller, use the lease option contract to motivate the potential buyer to move towards obtaining a mortgage. Set the option to expire in one year with the ability to renew it two times for a total of three years. The motivation is having a fee required each time it is renewed. Additionally, the longer the term, the more likely a court will view it more as a short-term mortgage than an option to buy.

Be clear that you are still the owner. You should have the taxes and insurance wrapped into the rent. But make sure you are the person paying them. Don't shift this responsibility to the tenant in the lease option contract. You can allow the tenant to pay the utilities if that is customary in your rental market. If it's customary for the landlord to pay, then make sure you do.

Be reasonable about the rent credit that applies towards the down payment. The more rent that is applied towards the down payment, the more courts see this as a build up of equity for the tenant.

Give the tenant a fair chance. Use a lease option contract that is fair and gives a reasonable tenant a chance to execute the purchase. It's easy for an investor to slip in lease option contract language that makes it almost impossible for the tenant to compete the purchase. If you don't want to sell the house, don't use a lease option contract. Be ethical.

Fully disclose all terms and conditions in the contract. Go over it in detail with the tenant before they sign. Encourage them to have their own attorney review it. Most attorneys will discourage a tenant for signing a lease option contract but a person determined to buy a house will sign with confidence as long as they clearly understand the terms and conditions they are agreeing to.

Besides reading this article about selling with a lease option contract, you'll want to read this other useful information that I offer free. Please take advantage of it today.

10 Free Real Estate Investing Ebooks

Several times each week, I make the most current real estate investing information available to readers. This time, it's about the lease option contract but the information I provide changes constantly to stay current with the market. Be sure to check back at: www.wendypatton.com. Also, get started learning how to do no cash option contracts by picking up a copy of my bestseller book: Investing in Real Estate with Lease Options and Subject to Deals.

By Wendy Patton

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I hope you've been studying the lease purchase training that I provide. The lease purchase training comes in two formats. This free blog that I update several times each week and the in-depth lease purchase training from the multiple books I've published on the subject over the many years I've personally been in the business.

If you are new to my lease purchase training blog, welcome. I will provide you with wealth building information. There are several ways to structure a lease purchase to provide multiple income streams.

Lease purchase training puts you in the driver's seat for effective real estate investing

Lease Purchase Training for Multiple Income Streams

My lease purchase training shows you how to collect a purchase option fee before your potential buyer even moves in. This can be a hefty fee, some times up to 10% of the total purchase price. Next, the lease purchase training shows you why and how you collect an above market rent until the buyer executes the purchase of the house. Finally, the total purchase price is for at least full market value and often at a premium to market value. My lease purchase training goes into the details of all three income streams.

The lease purchase training shows you how to do this very part time. With very little overhead and no employees. You can easily work from your home. The lease purchase training shows you how little work is involved. There's a little work up front finding the right property and potential buyer. After the deal is put together, based on your lease purchase training, the only thing to do is collect the monthly rent check until it's time to close the deal.

Lease Purchase Training in a Nutshell

The lease purchase training goes into detail about how to find motivated sellers. How to take out a no risk option on the house and have the right to sublease to another tenant. The lease purchase training shows you how to qualify that tenant as being able to make the purchase in a short period of time.

The lease purchase training shows you the one important but easy task that you want to stay on top of once each month. It's checking your tenant's credit score to be sure they are making progress towards being able to qualify for a mortgage.

Lease purchase training shows you how to help the tenant quickly improve their credit rating, greatly improving your chances of closing the deal. This lease purchase training is a very powerful tool for both the beginning and experienced investor wanting to control more properties with little or none of their own finances in the deal. Are you ready to make the leap to start the lease purchase training today?

Besides reading this article about lease purchase training, you'll want to read this other useful information that I offer free. Please take advantage of it today.

• The Lease Option Allows You to Control More Property
• Real Estate Investing
• Lease Option vs. Lease Purchase
• The Sandwich Lease Isn't Only For Beginners

·         The Lease Purchase - What Sellers Need to Know

• How to Do a Rent to Own - Building Financial Security

• Credit Reference Information is Needed by Real Estate Investors of All Types

Several times each week, I make the most current real estate investing information available to readers. This time, it's about lease purchase training but the information I provide changes constantly to stay current with the market. Be sure to check back at: www.wendypatton.com. Also, get started learning how to do no cash option contracts by picking up a copy of my bestseller book: Investing in Real Estate with Lease Options and Subject-to Deals.

 By Wendy Patton

What did you think of this article? Please leave a comment below.

For more exclusive content please subscribe to my RSS Feed and YouTube Channel.

The lease option vs. lease purchase has very different implications to both the seller and the buyer. It's critically important that both the buyer and seller understand their obligations under the lease option vs. lease purchase.

Typically, the seller will prefer the lease purchase arrangement while the buyer might go with either once they understand how the lease option vs. lease purchase works. One costs the buyer more but provides them flexibility while the other is less expensive but locks them into the purchase. Here's how they work....

Always understand the difference between lease option vs. lease purchase before signing a contract.

Understanding the Difference Between Lease Option vs. Lease Purchase

The lease purchase side of the lease option vs. lease purchase requires the buyer to complete the purchase. There is no "option fee" involved. Still the seller needs to make sure the buyer is motivated to complete the deal or the buyer could just walk away.

The seller is going to want to include portions of the lease option agreement in the lease purchase agreement. A key difference in understanding lease options vs. lease purchase is how the up front fee applies. The lease option involves the option fee. Money the seller collects in exchange for not selling the house to another buyer during the lease period. The option fee may or may not apply towards the purchase price. The seller has the option but is not required to make the purchase.

Many people, including experienced investors use these terms interchangeably. They are not interchangeable. The lease option vs. lease purchase are clearly different. Before entering a contract know which one it is and all of the conditions involved.

Lease Option vs. Lease Purchase - Only one Offers Flexibility

Only the lease option let's the buyer walk away from the deal and let's the buyer keep the option fee. In lease option vs. lease purchase, the lease purchase requires the buyer to complete the purchase. If the buyer does not compete the purchase by a specified date, the seller can sue the buyer to honor the contract.

Dealing with the lease option vs. lease purchase question can be difficult. Before making a decision, sit down with a good real estate attorney to understand lease option vs. lease purchase. One will favor you more than the other. The good news is that either lease option vs. lease purchase give buyers and sellers a better chance of closing a deal in today's' tough real estate market. Don't let the confusion between lease option vs. lease purchase stop you from considering both.

Pick up my training materials to learn more about lease option vs. lease purchase.

Besides learning the differences between a lease option vs. lease purchase, you'll want to read this other useful information that I offer free. Please take advantage of it today.

• The Sandwich Lease Isn't Only For Beginners

·         The Lease Purchase - What Sellers Need to Know

• How to Do a Rent to Own - Building Financial Security
• Subject to Deal - Overcoming Seller's Objections
• How to Do a Rent to Own - For Sellers
• Subject to Deal Insider Secrets

• Credit Reference Information is Needed by Real Estate Investors of All Types

Several times each week, I make the most current investing information available to readers. This time, it's lease option vs. lease purchase but the information I provide changes constantly to stay current with the market. Be sure to check back at: www.wendypatton.com. Also, get started learning how to do no cash option contracts by picking up a copy of my bestseller book: Investing in Real Estate with Lease Options and Subject-to Deals.

 By Wendy Patton

What did you think of this article? Please leave a comment below.

For more exclusive content please subscribe to my RSS Feed and YouTube Channel.

The first thing you want to do in a subject to deal is make sure the seller has a clear grasp of how a subject deal works. Mainly, that the existing financing will remain in place. Most likely, the seller will raise objections to your subject to deal. That's a good thing. It means the seller is taking your subject to deal seriously.

Make sure they understand they are working with a professional investor. The need to know they are welcome to ask questions and you will do your best to provide answers.

Subject to Deal - Sellers Questions

Seller's question: Can I have an attorney look over the subject to deal?

Investor's answer: Absolutely. I encourage it when you've never done a subject to deal before.

Seller's question: What happens if you become incapacitated or die?

Investor's answer: The subject to deal has contractual provisions for our heirs to continue the contract in the event that either of us becomes unable to.

Seller's question: How long will it take you to refinance the mortgage?

Investor's answer: I can't give you an exact date. What I can tell you is that I will immediately go to work looking for a buyer/tenant as soon as we close the subject to deal. I may find a qualified buyer right away or I might put a buyer/tenant in the house on a lease option contract. It could be a couple of years but I will keep the mortgage paid as required in the subject to deal.

Seller's question: I've heard of the "due on sale" clause. Why doesn't it apply to your subject to deal?

Investor's answer: Technically, it does apply. I reality, the banks won't enforce it as long as the mortgage is paid on time. The bank would much rather keep a mortgage in place that is being paid than risk another foreclosure.

Seller's question: Why aren't you offering my full asking price?

Investor's answer: In a subject to deal, you are saving several expenses and I am an investor trying to make a profit. The subject to deal that I offered is a fair price when you consider you won't be paying a realtor's commission and I'm not asking you to make any repairs. Also, you know you have a sale right now. If your list it with a realtor, you have no idea when it might sell or if it will sell for your asking price.

Seller's question: If I wanted tenants in the house, I'd rent it myself.

Investor's answer: I understand. A lot of tenants don't take care of the places they live in. That's one of the main reasons I go with lease options. These are people that want to buy the home. They take much better care of the house than your average renter does.

I can't anticipate every concern or question that will come up in your subject to deal. These are a section of the ones I've seen in my subject to deals. If you have a specific question about a subject to deal, please post it in the comments section below.

Before going with the subject to deal, you'll want to read this other information that I offer to you for free. Please take advantage of it today.

• How to Do a Rent to Own - For Sellers
• How to Do a Rent to Own - It's Like a Car Lease
• How to Do a Rent to Own Strategy
• Subject to Deal Pt. 2
• Subject to Deal Pt. 1
• Legal Shield - Avoiding Costly Mistakes

• Credit Reference Information is Needed by Real Estate Investors of All Types

Several times each week, I make the most current investing information available to readers. This time, it's the subject to deal but the information I provide changes constantly to stay current with the market. Be sure to check back at: www.wendypatton.com. Also, get started learning how to do no cash option contracts by picking up a copy of my bestseller book: Investing in Real Estate with Lease Options and Subject to Deals.

By Wendy Patton

What did you think of this article? Please leave a comment below.

For more exclusive content please subscribe to my RSS Feed and YouTube Channel.

From comments, I know readers struggle to understand how to do a rent to own. Because of that, I am constantly looking for new ways to explain how to do a rent to own. Today, I think I have found a better explanation of how to do a rent to own.

Most people are familiar with car leases. How to do a rent to own is very similar to a car lease. A car lease is a formal contract where you pay to use the car. At the end of the lease, you have the option to either return the car to the legal owner or purchase the car at a predetermined price. Leasing a car is not the same as renting a car.

How to Do a Rent to Own

When you lease a car, you are responsible for insurance, licenses, taxes, repairs, and maintenance. How to do a rent to own is similar but not exactly the same. You do pay for the insurance, taxes, repairs, and maintenance indirectly. These costs continue to go through the legal owner of the house until you arrange to purchase the house. But hey, you pay those costs as a renter without the possibility of gaining ownership.

The one major difference in how to do a rent to own is that you can become more liable for maintenance and repair costs. When renting, all maintenance and repair costs fall to the legal owner. How to do a rent to own involves the lessee taking predefined maintenance and repair costs.

The Time is Ripe for How to Do a rent to Own

The real estate market is constantly changing. Back in 2006 - 2007, how to do a rent to own was not the right strategy for most homebuyers or sellers. Today, how to do a rent to own is a great strategy for both buyers and sellers. How to do a rent to own is a win-win for both parties to the transaction.

When sellers execute a how to buy a rent to own, they gain an above market sales price and above market rent, while avoiding most maintenance costs. Sellers also have a motivated lessee taking better care of the home.

What buyers gain from a how to do a rent to own is they get into home ownership without qualifying for a bank loan today. Buyers have the monthly lease payment reported to the credit bureaus by the seller. Steady, on time payments, improve the buyer's credit rating. Using the how to do a rent to own strategy helps buyers qualify for a mortgage in a shorter period of time.

I encourage both sellers and buyers to take a close look at how to do a rent to own. Please pick up a copy of my books providing all of the details about How To Do A Rent To Own.

Besides learning about how to do a rent to own, you'll want to read this other useful information that I offer to you free. Please take advantage of it today.

• How to Do a Rent to Own Strategy
• Subject to Deal - Pt.2
• Subject to Financing Pt. 1
• Rent vs Rent to Own
• Wholesale Lease Options
• Legal Shield - Avoiding Costly Mistakes

• Credit Reference Information is Needed by Real Estate Investors of All Types

Several times each week, I make the most current investing information available to readers. This time, it's how to do a rent to own but the information I provide changes constantly to stay current with the market. Be sure to check back at: www.wendypatton.com. Also, get started learning how to do no cash option contracts by picking up a copy of my bestseller book: Investing in Real Estate with Lease Options and Subject-to Deals.

By Wendy Patton

What did you think of this article? Please leave a comment below.

For more exclusive content please subscribe to my RSS Feed and YouTube Channel.

Deciding if it makes sense to rent vs rent to own should be based on both financial and life style decisions. As a seller, you need to decide if you want to be in the landlord business long term.

When you answer the rent vs rent to own question by deciding to be a landlord, all of the responsibility for maintenance, taxes, and everything else falls on your shoulders. When you answer the rent vs rent to own question by shifting to a rent to own philosophy, you shift most, if not all, of these responsibilities to the renter/buyer.

As a real estate investor, you have the option to rent vs rent to own

Rent vs Rent to Own - The Rent Side

Being a landlord means pesky calls at 2 in the morning to unplug a toilet or fix a broken hot water heater. On the other hand, renting to own brings in a steady income while shifting many of these responsibilities to the soon to be buyer. One option you have in the rent vs rent to own equation is providing owner financing. That can be the best of both worlds when it comes to rent vs rent to own.

When you provide owner financing, you continue receiving the equivalent of a monthly rent check for as long as 30 years. Yet, when you decide to answer the rent vs rent to own question by selling to your renter, they take on all responsibility for the maintenance, taxes, and improvement costs.

However, taking the rent to own side of the rent vs rent to own decision means that you will lose out on the appreciated value of the property. Even if you finance the sale, after 30 years or less, the buyer owns the property. You will have collected a monthly check all that time and avoided the repair costs, but in the end, the rent vs rent to own property goes to the owner.

Rent vs Rent to Own - The Rent to Own Side

When deciding to rent vs rent to own, this is the one that I think every investor needs to carefully consider. In the rent vs rent to own decision, there is a lot of up side on the rent to own side. Besides the maintenance costs savings, there is the purchase option fee. It's like a down payment but it's not. It only applies as a down payment if you agree to that in a contract and if the renter exercises the purchase option.

Another upside in the rent vs rent to own decision is that when you go with the rent to own, you can charge an above market rent until the buyer exercises the purchase option. Then you carry the financing to collect a monthly check when you go with the rent to own side of the rent vs rent to own equation. In the end, you give up the appreciated value but you sure do collect a lot of money in the rent vs rent to own decision.

Besides considering the rent vs rent to own question, you'll want to read this other useful information that I offer to you free. Please take advantage of it today.

• Wholesale Lease Options
• Creative Financing - And Getting Your Money
• Finding Motivated Sellers - Solving Other Peoples' Problems
• Legal Shield - Avoiding Costly Mistakes
• Rent vs Rent to Own
• Lease Option Marketing - Free Online Event

• Credit Reference Information is Needed by Real Estate Investors of All Types

Several times each week, I make the most current investing information available to readers. This time, it's rent vs rent to own but the information I provide changes constantly to stay current with the market. Be sure to check back at: www.wendypatton.com. Also, get started learning how to do no cash option contracts by picking up a copy of my bestseller book: Investing in Real Estate with Lease Options and Subject-to Deals.

What did you think of this article? Please leave a comment below.

For more exclusive content please subscribe to my RSS Feed and YouTube Channel.

There are many ways you go about how to do a rent to own. Here, I provide answers to questions that frequently come up on the subject: how to do a rent to own. When it comes to how to do a rent to own, the buyers and the sellers have different concerns. I answer questions for both.

How to Do a Rent to Own - Sellers

Q: Why would I choose to do a rent to own instead of outright selling the house for cash.

A: That depends on your circumstances. However, there are advantages when you decide to learn how to do a rent to own. First, it can be difficult to find a qualified buyer in today's market. It can be even more difficult to find a buyer willing to pay your asking price. How to do a rent to own allows you to sell at an above market price and brings in many more potential buyers.

Q: How to do a rent to own seems like a complicated process. Where do I start?

A: Start by deciding the terms you want to offer the buyer. Decide how long you want the purchase option to be available. Most common is a 1 or 2 year purchase offer. Then decide how much to charge for a nonrefundable purchase option fee. Typically, it's between 1% and 5% of the purchase price. Check your local market to see if a standard exists.

Q: What's the next step in how to do a rent to own?

A: There are a few more steps deciding how to do a rent to own. One is deciding if your are going to apply part or all of the option fee towards the down payment. Again, check for local standards. However, it's generally a good idea to apply at least a portion towards the down payment. Doing so attracts more prospects and gives the buyer equity in the property when they apply for a loan. Finally, you can charge an above market rent and apply a portion of the rent towards the purchase to further entice buyers.

How to Do a Rent to Own - Buyers

Q: How to do a rent to own seems difficult, where do I start?

A: How to do a rent to own starts with a search for available houses. Begin your search for how to do a rent to own by asking a real estate agent to search the MLS. Also look at your local craigslist. You can also find any house for sale and make an offer to rent to own.

Q: When deciding how to do a rent to own, how do I know if I'm getting a fair deal?

A: You should always have a real estate attorney review any contract before signing. Just as importantly, you can counter offer any rent to own agreement to include terms that you prefer. How to do a rent to own is a very flexible contract that can be written to suit both the buyer and the seller.

Q: When I learn how to do a rent to own, what is my biggest risk?

A: Qualifying for a loan to complete the purchase is the biggest difficulty most people have with how to do a rent to own. When examining how to do a rent to own offer, carefully consider if it's reasonable for you to fix your credit rating with in the option time period. If not, ask for more time. Also, how to do a rent to own can include a provision to automatically extend the option period.

The how to do a rent to own strategy offers many possibilities to the investor and seller willing to think outside the box. These have only been a few of the many possible question about how to do a rent to own.

Besides learning about how to do a rent to own, you'll want to read this other useful information that I offer to you free. Please take advantage of it today.

• Creative Financing - And Getting Your Money
• Finding Motivated Sellers - Solving Other Peoples' Problems
• Legal Shield - Avoiding Costly Mistakes
• Rent vs Rent to Own
• Lease Option Marketing - Free Online Event
• Creative Financing - What's Involved

• Credit Reference Information is Needed by Real Estate Investors of All Types

Several times each week, I make the most current investing information available to readers. This time, it's how to do a rent to own but the information I provide changes constantly to stay current with the market. Be sure to check back at: www.wendypatton.com. Also, get started learning how to do no cash option contracts by picking up a copy of my bestseller book: Investing in Real Estate with Lease Options and Subject-to Deals.

What did you think of this article? Please leave a comment below.

For more exclusive content please subscribe to my RSS Feed and YouTube Channel.

The trickiest part when it comes to how to do a rent to own home is not finding a buyer or a motivated seller. It's making sure everything is covered when you write the how to do a rent to own contract.

One sure fire way of getting your how to do a rent to own contract correct is by picking up a copy of my best selling book Investing in Real Estate with Lease Options and Subject-to Deals.

Two Major Parts to the How to Do a Rent to Own Contract

You want to keep the lease portion of the agreement separate from the purchase agreement when you write your how to do a rent to own contract. This protects you if there is ever a legal challenge to the contract.

When the lease agreement and purchase offer are written in the same how to do a rent to own contract, some courts tend to view the contract as giving the buyer an equity position in the house even if the purchase option has not been executed. When the documents are kept separate this tendency goes away.

Major Elements for Your How to Do a Rent to Own Contract

How to do a rent to own contracts can have many variables. It's a good thing because the contract can be written to suit the needs of both the buyer and seller. The major elements needing to be clearly spelled out in a how to do a rent to own contract are:

• The amount of the purchase price and option fee and if any of the option fee will apply towards the down payment.
• Your how to do a rent to own contract must define how long the purchase option is open.
• Your how to do a rent to own contract should define if seller financing is available and if there is a balloon payment.
• Your how to do a rent to own contract must define if any and how much of the monthly rent is applied towards the purchase.
• Whether the current owner or tenant is responsible for repairs is an important element some times left out of how to do a rent town contract.
• Another item sometimes missed in a how to do a rent to own contract is whether or not the tenant/buyer has the write to assign the purchase offer to a third party if they do not buy the house.

Always seek the advice of a competent real estate attorney knowledgeable about how to do a rent to own contract.

The how to do a rent to own strategy offers many versions to the investor willing to think outside the box. These have only been a few of the many possibilities of how to do a rent to own.

Besides learning about how to do a rent to own, you'll want to read this other useful information that I offer to you free. Please take advantage of it today.

• Finding Motivated Sellers - Solving Other Peoples' Problems
• Legal Shield - Avoiding Costly Mistakes
• Rent vs Rent to Own
• Lease Option Marketing - Free Online Event
• Creative Financing - What's Involved

• Credit Reference Information is Needed by Real Estate Investors of All Types
• Legal Shield - When You Don't Know Who to Call

Several times each week, I make the most current investing information available to readers. This time, it's how to do a rent to own but the information I provide changes constantly to stay current with the market. Be sure to check back at: www.wendypatton.com. Also, get started learning how to do no cash option contracts by picking up a copy of my bestseller book: Investing in Real Estate with Lease Options and Subject-to Deals.

What did you think of this article? Please leave a comment below.

For more exclusive content please subscribe to my RSS Feed and YouTube Channel.

How to Do a Rent to Own

Today's investors need to understand how to do a rent to own. There are two basic structures when it comes to how to do a rent to own.  The first structure of the how to do a rent to own contract leaves the option of buying the home up to the renter. The other how to do a rent to own contract structure requires the renter to buy the home.

In both scenarios of how to do a rent to own, the investor benefits. One of the biggest benefits is a tenant covering the mortgage and maintenance costs. The second benefit is that when the renter plans to purchase the house, they take better care of it because they have a stake in keeping the house in good repair. Both the investor and renter benefit when they decide how to do a rent to own.

How to Do a Rent to Own - Renters Option

In this arrangement of how to do a rent to own, the buyer has the option but is not required to buy. A purchase price is agreed to and the seller is obligated to sell at that price within a set amount of time. The time period is typically 2 or 3 years. Where the seller does benefit is by receiving an option fee from the renter. To lock in the purchase price the renter pays a fee of about 5% of the purchase price.

When houses aren't selling well and prices remain low, having a renter cover the mortgage and maintenance and pay a fee to lock in the purchase price are benefits that far exceed just renting the house. That's why investors need to know how to do a rent to own contract.

How to Do a Rent to Own - Buyer Locked In

This version of how to do a rent to own locks the buyer into purchasing the house within a certain period of time. The down payment is usually the biggest hurdles stopping a renter from purchasing. With how to do a rent to own, a higher rent is collected each month by the seller. A portion of the rent goes direct to the seller and another portion goes into an escrow account.

The escrow account is used to build a down payment. How much goes into the escrow account is determined by the size of the down payment and how many months a portion of rent will be going into escrow. If a $10,000 down payment is required and collected over 36 months, the additional amount needing to go into the escrow account is about $278 per month. This makes it affordable for the renter to save the down payment within three years. That's why a renter needs to understand how to do a rent to own contract.

Besides learning about how to do a rent to own, you'll want to read this other useful information that I offer to you free. Please take advantage of it today.

• Rent vs Rent to Own
• Lease Option Marketing - Free Online Event
• Creative Financing - What's Involved
• Benefits of the Subject to Deal

• Credit Reference Information is Needed by Real Estate Investors of All Types
• Legal Shield - When You Don't Know Who to Call

Several times each week, I make the most current investing information available to readers. This time, it's how to do a rent to own but the information I provide changes constantly to stay current with the market. Be sure to check back at: www.wendypatton.com. Also, get started learning how to do no cash option contracts by picking up a copy of my bestseller book: Investing in Real Estate with Lease Options and Subject-to Deals.

What did you think of this article? Please leave a comment below.

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Wendy here with an invitation to join me this week for a free training session I am hosting with my good friend and marketing expert. Her topic will be Turbo Charging Your Buying Machine, Your Income Streams, and Running Your Real Estate Investing Business on Auto-Pilot.

Carve a Unique Niche Market For Yourself

This is going to be an incredible session where my special guest is going to share all of her insider secrets about the ins and outs of buying and selling houses quickly, no matter what your real estate market is doing.

You are going to learn how she generates a seven figure income using her unique direct mail strategies to locate qualified motivated sellers and buyers, then how she automates the follow up and the buying process.

And....she's going to teach you how to do the same thing in your pajamas without licking a single stamp.

Develop Strategic Marketing Plans That Work

She is also going to teach you how you can automate the offer making and follow up process with these motivated sellers without ever leaving your desk.

Here's an example of what others think about this marketing system.

"Direct mail works great and my phone is ringing off the hook from your zip code mailing. I just completed my first deal since the conference. The house had many great offers and sold in only two days for more than the asking price. This was a very lucrative transaction since my check at closing was $39,018.30. I wholeheartedly recommend this direct mail system to anyone wanting to grow their real estate investment business. --Bert Cox - Manchester, NH"

Harness The Power of Direct Mail and Online Marketing

On this seminar, you are going to learn:

• How to carve a unique niche market for yourself that other investors simply don't know about.
• How to create a flexible marketing plan so you can make boatloads of money in your real estate business no matter what your market is doing.
• How to implement a dummy proof, affordable and efficient 'cookie cutter' system that will have motivated sellers practically begging you to take their properties off their hands.
• How to automate your systems including the offer making process and selling your properties quickly. This one nugget can save you hundreds of hours and earn you thousands of dollars each year.
• How to turn small marketing dollars into BIG profits with minimal effort and HUGE results!
• How to develop a long term marketing plan for your business no matter what your real estate market is doing.

You can't afford to miss this incredible training. Join us for this exclusive seminar that I have put together for my students to give you the competitive edge your financial future depends on.

She is the best there is at creating a marketing machine for your real estate business - in fact, some may say she is a Marketing Genius!

Join us to learn the MAGIC....Space is limited so grab your seat now!

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Click Here To Register for January 31st, 2013 at 9:00pm (est)

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Marketing is key to the success of any business - and my guest on this webinar is the best! You really can't afford to miss this life changing call!

To your Success,

Wendy

P.S. Remember, space is limited - grab your seat now!

Click Here To Register for January 31st, 2013 at 9:00pm (est)

The sandwich lease option is an incredible financial instrument for creating profits without ownership. The name sandwich lease option comes from the fact that you sandwich yourself between the seller and buyer/tenant. Put yourself in the meat of the sandwich lease.

First, you find a seller willing to sell based on a lease option. Houses that have set empty for some time and are costing the seller money make the best candidates. You then negotiate a sandwich lease contract with the seller. There are several ways you can structure the contract, too many to deal with in a single blog. If you want to know all of the ways you can structure a sandwich lease option, I suggest you pick up a copy of my book Investing in Real Estate with Lease Options and Subject-to Deals.

The sandwich lease is great for beginning investors

Sandwich Lease - Sellers Contract

With the sandwich lease, you want the option but not the obligation to buy between now and say 5 years from now. You also want to be able to assign the contract to a buyer/tenant and allow them to live in the house. You may or may not have to pay a fee for the sandwich lease. Try to negotiate an agreement where you only pay the fee after you find a buyer/tenant. You can then collect the buyer/tenants fee to use to pay your sandwich lease fee. That gets you into the sandwich lease for nothing out of your own pocket.

With the seller half of the sandwich lease contract in hand, you begin looking for a tenant/ buyer. This is often someone that has a solid financial history but had a financial set back or two during the Great Recession. They need another year or so to put their finances in shape to qualify for a loan.

All the Ways You Profit From a Sandwich Lease

Once you place a buyer/tenant in the house, you want to have a spread in several places between the seller and buyer/tenant. The first place is the sandwich lease option fee. Maybe you pay the seller a $500 fee and collect $2,000 from the buyer tenant. That becomes you first profit in the sandwich lease. Then you rent to the buyer/tenant for more than you pay rent to the seller. It's typical to collect an above market rent in a sandwich lease.

The above market rent becomes an ongoing monthly profit for you until the buyer/tenant exercises their half of the sandwich lease option. Your next profit point becomes collecting a higher down payment from the buyer than you pay to the seller to exercise your option to buy.

Finally, you sell the house to the buyer for more than you purchase it from the seller. This is typically your largest profit point. The sandwich lease option offers the beginning investor the opportunity to make big profits without investing your own money and for a minimal risk.

Before going with the sandwich lease option strategy, you'll want to read this other information that I offer to you for free. Please take advantage of it today.

• Wholesaling Lease Options
• Offer Motivated Sellers Multiple Ways to Sell
• Why Seller Financing Will Make You Big Profits
• Rent to Buy
• Credit Reference Information is Needed by Real Estate Investors of All Types

• Legal Shield - When You Don't Know Who to Call

Several times each week, I make the most current investing information available to readers. This time, it's the sandwich lease option but the information I provide changes constantly to stay current with the market. Be sure to check back at: www.wendypatton.com. Also, get started learning how to do no cash option contracts by picking up a copy of my bestseller book: Investing in Real Estate with Lease Options and Subject-to Deals.

What did you think of this article? Please leave a comment below.

For more exclusive content please subscribe to my RSS Feed and YouTube Channel.

Wholesaling lease options is a good method for my students that want to get into lease options but don't have cash to invest in purchasing a sandwich lease or a house. There are no cash ways other than wholesaling lease options that I have occasionally written about as well.

Wholesaling lease options are about finding a buyer that wants a lease option and connecting them with a seller wanting the same thing. You are the middleman flipping the lease option to the buyer for a fee.

The major difference between wholesaling lease options and sandwich lease options is you stay in the lease option deal in a sandwich lease but when wholesaling lease options, you are done once you bring the seller and buyer together.

Wholesaling lease options work best when a house has been vacant a long time - motivated seller.

Why a Seller Will Agree to Wholesaling Lease Options

The fact is you have to hunt down wholesaling lease option deals. When you find a motivated seller that understands the concept of wholesaling lease options, its' not that difficult to convince them to give you a chance to put together a wholesaling lease option deal.

The secret to convincing the seller to give you an opportunity to put together a wholesaling lease option is for your deal to be nonexclusive. That means the seller continues marketing the house in other ways. If you want to make your wholesaling lease option exclusive, you'll pay the seller a fee to take the property off the market and I don't recommend that. The objective of a wholesaling lease option is for you to earn a fee without investing anything other than your time.

The Finances of Wholesaling Lease Options

Let's say you're going to collect a 5% fee for putting a wholesaling lease option together on a $100,000 house. You're up front with the seller by telling them you'll find an option buyer for 5% of the sales price or $5,000. That money comes out of the buyer's option fee, which will be equal to your 5% fee.

That means there is nothing left for the seller at closing. Often, this turns off sellers to the wholesaling lease option. That's an important reason to leave the deal nonexclusive so they can look for a better deal.

Sometimes, the seller will insist on something at closing - like 3%. That means you need to bring in a buyer willing to put up 8%. This is possible in a wholesaling lease option but a big challenge. You want to work this out with the seller in the beginning. Often, it doesn't take more than asking them if they want you to turn away any deals with less than 8%. The seller doesn't want any deals turned away. They agree to have you bring any deal you find and they will at least take a look at it. In the end, you want the wholesaling lease option contract to state that you receive your 5% fee at closing and the seller collects anything above that.

Before going with the wholesaling lease option strategy, you'll want to read this other information that I offer to you for free. Please take advantage of it today.

• Offer Motivated Sellers Multiple Ways to Sell
• Why Seller Financing Will Make You Big Profits
• Rent to Buy
• Contract for Deed - Risks and Reality
• Credit Reference Information is Needed by Real Estate Investors of All Types
• Legal Shield - When You Don't Know Who to Call

Several times each week, I make the most current investing information available to readers. This time, it's wholesaling lease options but the information I provide changes constantly to stay current with the market. Be sure to check back at: www.wendypatton.com. Also, get started learning how to do no cash option contracts by picking up a copy of my bestseller book: Investing in Real Estate with Lease Options and Subject-to Deals.

What did you think of this article? Please leave a comment below.

For more exclusive content please subscribe to my RSS Feed and YouTube Channel.

The contract for deed is another good way to invest in real estate today. The contract for deed is a way to get a borderline buyer into your house without involving bank financing. Typically a contract for deed allows the buyer to assume the existing mortgage on the house. If fair market value of the house is for more than the mortgage, the seller can carry a second mortgage or the buyer can pay the market value balance as a down payment.

There are risks with the contract for deed strategy. The primary risk is keeping the mortgage, taxes, and insurance current. The mortgage remains in the seller's name although the title is registered in the buyer's name. If the buyer defaults on the mortgage, it's the buyer's credit that is affected.

Contract for deed - another flexible way to invest in real estate. 

Contract for Deed - Ways to Minimize Risk

In some contract for deed scenarios, the seller retains title to the property but the buyer has the right of occupancy as long as the mortgage is kept current. The risk is to the buyer if they are making payments to the seller and the seller fails to make the mortgage payment. A good solution is to involve an escrow company as a third party. The buyer pays the escrow company and the escrow pays the mortgage. The escrow company immediately notifies the seller if a payment is missed. The seller then has the option of paying the mortgage to protect his or her credit score.

The seller runs the risk of the buyer defaulting on the mortgage in the contract for deed strategy but there are ways to minimize this. State law and the terminology vary by state. The first way to try minimizing the risk of default with a contract for deed arrangement is carefully wording the contract so that the seller can demand the county return title in the event three payments are missed.

Another is having the buyer sign a quit claim deed at the time of closing. The quit claim deed is held by a third party such as an attorney. The contract for deed has the circumstances under which the deed can be filed. These are ways the seller can recover the house if the buyer fails to comply with the terms of the contract for deed.

Balloon Payment - Another Contract for Deed Risk

Often, a contract for deed is for a shorter period than a traditional 30-year mortgage. A contract for deed may amortize over 30 years but have a balloon payment due in 3 or 5 years. The buyer is expected to obtain traditional financing to pay off the balloon payment. This can be very risky if the contract for deed allows the contract to be cancelled if financing is not obtained.

One way of dealing with this is including an escalation clause in the contract for deed if financing is not obtained. Instead of the house being returned to the seller, the buyer's payments are automatically raised a predetermined amount. This could be an increase in the interest rate to further compensate the seller. Or it could be an increase in the monthly payment to pay the house off faster.

While there are risks associated with a contract for deed, there are also ways to structure a contract for deed to protect both the buyer and the seller. What is important is having a knowledgeable real estate attorney review the contract for both the buyer and seller's protection.

Before going with the contract for deed strategy, you'll want to read this other information that I offer to you for free. Please take advantage of it today.

• Option Contract Requirements
• How to Use an Option Contract
• Craigslist Autoresponder Saves Time While Earning Money
• Lease to Own is Full of Flexibility
• Credit Reference Information is Needed by Real Estate Investors of All Types
• Legal Shield - When You Don't Know Who to Call

Several times each week, I make the most current investing information available to readers. This week, it's the contract for deed strategy but the information I provide changes constantly to stay current with the market. Be sure to check back at: www.wendypatton.com. Also, get started learning how to do no cash option contracts by picking up a copy of my bestseller book: Investing in Real Estate with Lease Options and Subject-to Deals.

What did you think of this article? Please leave a comment below.

For more exclusive content please subscribe to my RSS Feed and YouTube Channel.

If you are looking for information about an option contract, you have come to the right place. You can start by picking up a copy of my best selling book Investing in Real Estate with Lease Options and Subject-to Deals. There is also a wealth of free option contract information in the archive of this blog. I've been writing about the option contract for years because it has been the best investment vehicle you can use in this tight real estate market.

Tips For Structuring an Option Contract

Let's start with the basics. You want to document everything in your option contract. Once you think everything is documented, you want to have it reviewed by a real estate attorney experienced with option contracts. You will probably need to find a commercial real estate attorney because an option contract is more common in commercial deals than in residential deals. Commercial real estate attorneys are also more experienced at putting together creative deals.

As the seller in an option contract deal, you are the investor. Your tenant/buyer is a consumer. If your option contract ever ends up before a judge, the assumption will be

An option contract is the way to go in today's real estate market

that you're more sophisticated when it comes to real estate deals. The position that you want to be in is that you fully disclosed how you are making money in the deal and how it benefits the buyer.

If you are doing several option contract deals a year (as you should be) you can draw up a pamphlet explaining in detail how an option contract works. Have the tenant/buyer read and sign the pamphlet so you have a signed copy in your files

A New Strategy With the Option Contract

I've written in previous blogs about keeping the option contract separate from the lease contract. That's to keep a court from construing the lease payment as being a mortgage payment that is building equity for the tenant. Now you want to take this a step further by making the lease period a single year. This mimics a typical residential lease.

You may need to give the tenant/buyer more than a year to qualify for a mortgage. That's easily accomplished by including a renewal clause for an additional year and include the possibility of renewing a second time as well.

Assuming you really are interested in selling the house, you may want to include a credit score qualification as part of the renewal clause. Perhaps the tenant can only renew if their credit score improves by 50 points. If the tenant can't make steady progress towards obtaining a mortgage, this gives you the chance to write an option contract with a different tenant/buyer.

When you go with the option contract strategy, you're going to need this other information that I offer to you for free. Please take advantage of it today.

• Lease to Own is Full of Flexibility
• Rent to Buy Is Not a New Strategy
• How to Do a Lease to Own
• Credit Reference Information is Needed by Real Estate Investors of All Types
• Skip Search Solutions
• Legal Shield - When You Don't Know Who to Call

Several times a week, I make the most current investing information available to readers. This week, it's the option contract strategy but the information I provide changes constantly to stay current with the market. Be sure to check back at: www.wendypatton.com. Also get started learning how to do no cash option contracts by picking up a copy of my bestseller book: Investing in Real Estate with Lease Options and Subject-to Deals.

What did you think of this article? Please leave a comment below.

For more exclusive content please subscribe to my RSS Feed and YouTube Channel

The rent to buy strategy is not new. During the early to mid 2000s the rent to buy strategy fell out of favor when easy mortgage approvals where the better way to invest in real estate. But those days are gone, at least for now.

With easy to obtain mortgages in the rear view mirror, more creative financing methods are the way to sell or buy a home today. There are two ways that make particular sense and rent to buy is definitely the leader of the pack.

The other method that makes some sense is "Subject to Existing Financing". That's where you take a down payment from a buyer and let them assume making the payments on the existing mortgage and make a second mortgage payment to you. But here is why I favor rent to buy in today's marketplace...

Why Rent to Buy Makes the Most Sense

As the seller, you have more financial exposure with the subject to financing method than you do with the rent to buy method. With the subject to method, you remain responsible for the mortgage and dependent on the buyer to make the payment. If they don't make the payment, the default and potential foreclosure will go on your credit report. However, there are ways to minimize the risk that I'll explain in an upcoming blog.

The rent to buy method works a little better for the seller because the seller remains in full control of the mortgage. While the seller still needs the buyer to make the monthly payments, it won't be three or more months down the road before they learn the mortgage isn't being paid. Probably more importantly, with the rent to buy method, the buyer doesn't have a executed purchase agreement. The rent to buy method is only a contract to sell at a certain price once the buyer obtains separate financing that will be used to pay off the seller's mortgage.

Rent to buy is a win-win for sellers and happy new homeowners.

Extra Precaution With the Rent to Buy Method

You can easily make the rent to buy method extra safe for the seller by making the rental agreement and the purchase option separate contracts. There is a small risk to the seller when the rental agreement and purchase option are contained in the same contract in a rent to buy arrangement. If the renter fails to make the payments and the seller is forced to evict the tenant, it's conceivable under some state laws that a judge can find the renter has a financial interest in the house under the purchase option portion of the contract. The judge may not grant the eviction or may order some of the purchase option fee to be returned.

You want to divide the rent to buy into two separate contracts. By making the rental agreement of the rent to buy deal separate from the purchase agreement, a judge can only consider the rental agreement contract in an eviction proceeding. The purchase agreement will be a separate contract that does not enter into the legal decision as long as the buyer has not executed the purchase option of a separate contract of rent to buy arrangement.

Learn everything you need to know to sell with the rent to buy method in my best selling book Investing in Real Estate with Lease Options and Subject-to Deals.

When you go with the rent to buy strategy, you're going to need this other information that I offer to you for free. Please take advantage of it today.

• How to Do a Rent to Buy
• Lease Option Facts
• Credit Reference Information is Needed by Real Estate Investors of All Types
• Skip Search Solutions
• Credit Report Information Landlords Need

Legal Shield - When You Don't Know Who to Call

Several times a week, I make the most current investing information available to readers. This week, it's the rent to buy strategy but the information I provide changes constantly to stay current with the market. Be sure to check back at: www.wendypatton.com. Also get started learning how to do no cash lease options by picking up a copy of my bestseller book: Investing in Real Estate with Lease Options and Subject-to Deals.

What did you think of this article? Please leave a comment below.

For more exclusive content please subscribe to my RSS Feed and YouTube Channel