Old concept works with real estate

Old Concept Works With Real Estate - Rent to Own

By Gary Kent Boyd Expert Author Gary Kent Boyd There is an old concept that is making a comeback recently in the real estate market that is a good way of increasing value in the property. Just by controlling a property and changing the terms with which you make it available to a new buyer, you can instantly increase the value of that real estate.

Rent to Own Concept Simply by using the rent to own concept that has been around for many years in a new way you can make your property more valuable. This is what you need to do. You are going to be a matchmaker, matching up a motivated seller to a hungry tenant buyer. By helping match up these two and giving

them what they want you are going to get paid handsomely for your effort.

Three Things You Need to Buy a Home What bankers need to lend money on a home is a large down payment, good credit, and adequate monthly income. Without one of these three the banker will not loan if the tenant buyer is lacking in one or more of these key areas. The tenant buyer attitude is down the road I can clean up these key areas and two to three years from now I will be able to qualify for a new loan and buy in the traditional way.

A Hypothetical Example We can follow through with an example to make it easy to understand the concept. Sammy the seller was transferred to a new city in his job but has not

sold his house yet. He has to move in three weeks and has no chance of selling it now and closing in that time. His options are to slash the price of the house for a quick sale, or rent it out until he can find a buyer.

This is where you come in. As a Purchase Option investor, you can solve Sammy's dilemma. You come in and agree to rent his home for 6 years for the amount of his payments. At the same time, you agree upon a price at which you can buy the house at any time you choose over the six year period.

This is called a "lease option" or a "lease purchase" and it is the foundational strategy of the Purchase Option system.

Sammy's payments on the home is $1,300 monthly.

You will cover this amount so that your seller will have no costs associated with the property over the 6 year period in which you control it. He wanted $190,000 but you have agreed to pay him $180,000

because he will be paying no real estate commission. You will be locking in today's price on his home, that has just about reached rock bottom in this slow market, while gaining the appreciation over the six year period that is one part of your profit. The most attractive feature of the deal is that you only make part of your profit from the difference of the price you lock in and the price you sell it for.

So if you turn around and rent the property for $1,800 a month your potential over a six year period in profits is $36,000 (72 months X $500). if your house appreciates in value at 5% a year X 6 years (compounded)= $$74,600 + $36,000= $110,000 is the profit over 6 years and you did not have a dime in it! Now after 6 years you can buy it by putting 10% down ($18,000) and still come out $92,600 ahead. Not bad for actually not owning the property yet!

Benefits In review you get a positive cash flow of $500 a month, you can ride the appreciation curve up on an asset you do not own, haven't signed personally on a loan for, and have zero maintenance responsibilities for.

Does it get any better than this? And all you had to do in your research was hook up a motivated seller to a motivated tenant buyer. And how do you do that? Just put a sign in your yard that simply states "I Buy Houses" and you should be able to find a motivated seller in a matter of days. Happy hunting!

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