Lease-Purchase Option? It’s A Great Way To Seller-Finance!
Seller financing comes in many forms. Check out this lease-purchase option solution.
David and Samantha just moved into town with new jobs. They want to buy a home, but realize they can’t get qualified for a conventional loan because they haven’t been on the job at least two years. They have about $10,000 for a down payment.
They have good credit scores. Both are above FICO 720. David and Samantha are targeting “Motivated sellers”. They understand the secret of leverage in financing, and plan to use it to buy a very nice home on excellent terms.
Ted and Alice are motivated home sellers. Their home has been listed with a real estate agent for three months, and nothing has happened yet. Not even a nibble. The real estate listing is about to expire. Ted and Alice have two mortgage payments to make. One payment is on their new home and there is another one on their existing home. They really need “debt relief” from their existing home! They need it really fast!
When David and Samantha get in touch with Ted and Alice, the property is For Sale By Owner. Ted and Alice are willing to listen to creative solutions to their problem.
The house is a 4 bedroom, 2.5 bath traditional style home. It’s a sprawling 2500 square foot two story house with a full finished basement. All of this on a half acre lot.
David and Samantha love the house and the neighborhood. After some negotiation they all arrive at the following terms for the purchase agreement.
Purchase of the home is by Rent-to-Own or lease-purchase strategy.
Current Value: $250,000 (5% appreciation)
Term: 24 months
| Option 1 | Option 2 | Option 3 | | Rent: $1,495 | Rent: $1,595 | Rent: $1,695 | | Rent Credit: $0 | Rent Credit: $200/mo. | Rent Credit: $400/mo. | | Total RC: $0 | Total RC: $4,800 | Total RC: $9,600 | | Purchase for: $259,990 | Purchase for: $259,990 | Purchase for: $259,990 | | Rent Credits: $0 | Rent Credits: ($4,800) | Rent Credits: ($9,600) | | Option: ($10,000) | Option: ($10,000) | Option: ($10,000) | | Final Price: $249,990 | Final Price: $245,190 | Final Price: $240,390 |
The projected property value in two years is $275,625.
Results of this strategy
Ted and Alice got to sell their property at top dollar and get the debt relief they desperately needed.
David and Samantha were able to purchase a beautiful home with only $10,000 down and some creative financing. Oh yes, they also get built in equity between $25,635 and $35,235; depending on the option they choose…in only two years!
Can you see how the lease-purchase strategy can help you solve your problem?
NO BANKS NEEDED WHEN YOU SELL OR BUY!!
The lease-purchase option solved problems for all involved, but that was only the beginning. The note creation in two years can still mean “no banks needed”!
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