How Do Lease Options Work For Your Pittsburgh House?
Real estate investors and private sellers are turning to lease options in order to sell a property they no longer want. It can be a practical, efficient and lucrative way to sell. Learn more about how it works in our latest post!
Do you feel stuck or burdened by a home you want to sell? Have you tried listing it without any reasonable offers coming in? With a lease option, you can sell the house for the price you want, while making an extra income until the house closes. Keep reading to learn more about how to set it up, as well as the pros and cons it can offer you!
What Is It?
A lease to own agreement will give your tenant a way to lease your house with the option to buy at the end of the lease term. It is typically a win-win situation that will benefit both the buyer and seller. It isn’t always the first thing property owners think of when deciding to sell, but as you will see below, there are a number of benefits to consider.
What Are The Benefits?
Guaranteed Tenants
It is highly unlikely that your tenants will want to break the lease. They have a sincere interest in the house and will be paying a higher than average rent plus a deposit they will lose if they decide to leave the property. If they default on the lease, the agreement is off and they are out the extra money they have spent.
Higher Than Average Rent Payments
In some cases, a portion of the monthly rent payments will go toward the down payment on the house. In other cases, the higher than average rent is pure profit. The inflated price is the cost of letting the tenant postpone the purchase by allowing them to lease.
Sell For The Price You Want
Seeing as the tenant is more eager to buy, you likely won’t have a problem with them agreeing to pay the price you want for the home. As long as it appraised at the price you want, your tenant will pay. If you list the house on the MLS, you won’t have any guarantees of getting the price you are after for the property. You may even have to lower the price if it isn’t selling right away.
Tenant Pride
Seeing as your tenant will have a much larger interest in the house, they will do more to take care of it than the average renter. They treat the house as if it were their own, going out of their way to keep things nice.
What Are The Drawbacks?
Locked In Price
The price is negotiated form the beginning, so if your home value jumps up 20% during the agreement, you will still have to sell for the pre-negotiated price.
You Won’t See Your Cash Right Away
You should only do a rent to own agreement if you do not need the cash from the house right away. While you will receive a deposit and higher rent payments, the balance owed to you won’t be paid for a couple of years.
How Do I Set It Up?
Setting up a lease to own agreement is similar to setting up a rental agreement but with an option to buy at the end of the lease term. As with any real estate agreement, the terms of the deal should be made very clear to both parties. Both the tenant and the owner need to know what their roles and responsibilities are in relation to the home. For example, in most cases, the tenant will be responsible for the repairs, maintenance and even the property taxes on the home during the duration of the lease period. Working with a professional such as CZ Capital Group can help you to ensure the agreement is handled correctly.
4 Reasons Why You Should Consider Using A Hard Money Lender (For Borrowers In Pittsburgh, Pa)
Are you an investor in the Pittsburgh PA area, or an investor looking at properties located in Allegheny County area zip codes? Then this is for you: here are 4 reasons why you should consider using a hard money lender.
Real estate investors know that investing can tie up your capital. For most investors, that can create challenges when your capital is all tied up: How do you operate your business? How do you deal with unexpected expenses? How do you grow?
You may have some different options to fund the acquisition or repairs but many investors are turning to hard money loans to help them. Here are 4 reasons why you should consider using a hard money lender…
4 Reasons Why You Should Consider Using A Hard Money Lender
Reason #1. Save Your Own Capital
The top reason, which we’ve already hinted at, is that using your own money ties up your capital and prevents you from running and growing your business. A hard money loan uses someone else’s money, which keeps your capital liquid so you can spend it to grow. Some investors with newly freed-up capital realize that they can actually do more deals now!
Reason #2. Leverage
As an investor, you’re probably familiar with the principle of leverage: getting a loan (such as a mortgage, or, in this case, a hard money loan) to pay for a large project, yet only needing to make small payments over time to pay the loan back. This makes it easier to take on large, costly projects without having to first save up the money.
Reason #3. Professional
Another way investors often fund their deals is through private lenders and investors who they know. However, if you do that long enough, you’ll learn that these private investors may require some extra hand-holding, or they might call you up in a panic in the middle of the night to get their money back because they need it quickly.
Bottom line, they’re nice people but they’re not professional investors. Hard money lenders are professionals who put their money to work and expect a return – they require paperwork and due diligence but they won’t be like those friends-and-family investors who fret night and day about their money.
Reason #4. Speed
Some investors just try to do it alone, using their own capital. When a repair comes up, they save up their money and when they have money they make the repair. But this can take a long time. It doesn’t make sense to delay generating a return on your deal; instead, borrow the money, make your repairs and generate a return on your deal sooner.
Summary
Running your real estate investing business requires capital – capital to run the business, acquire properties, make repairs and so on. Most people need extra capital and are reluctant to tie up all their money in a deal, which is where hard money lenders come in. If you’re trying to figure out whether you should borrow money for your next deal, you’ve just read 4 reasons why you should consider using a hard money lender.
How to find foreclosures in Pittsburgh PA
There’s a lot of competition to find great deals on local Pittsburgh PA foreclosure properties.
Finding them is only one part of the process – you also need to know how to capture them.
Here are a few secrets from the pros that we’ve used with great success on how to find great foreclosure deals in Pittsburgh.
1. Comb through the same listings everyone uses.
There are a lot of ways to access local foreclosure data in Pittsburgh and your surrounding area – and foreclosure.com does a relatively good job of combing through default notices, bankruptcies, tax sales, and distressed asset lists. The main drawback with online resources like that is there tends to be a lag time in the time they get the info online… so the data can be a bit old sometimes.
2. Search the lesser-known publications sometimes used by smaller lenders.
Most of the publications in Pittsburgh are indexed and captured online, but every once in a while a lender will mistakenly only publish in a smaller circulation if they think it meets the legal requirements. These notices are the notices of default that lenders are legally required to publish in public records. Those are one of the first places you can find out about a foreclosure.
3. Establish great working relationships with at least one broker.
When you’re starting out as an investor in Pittsburgh PA, you’d better not burn any bridges – especially with the power real estate brokers in this town.
The best of the bunch (and that’s a very short list) work with dozens of investors, and they know exactly who is looking to buy what property – they’ll call the ones that they know will close the deal without hassles to them. Once you’re off the short list of folks who get the calls, you probably won’t get back on it. There are too many credible investors looking for great deals for them to bother dealing with rookie mistakes. Interview a few, and make it your intention to give all your business to one person.
Make it clear what that broker must do to earn and keep your business, play fair and never compromise your integrity. If you have to fire that broker, do so with grace and it will be a learning experience for everyone. But don’t ever fire a pro on a whim. Be incredibly loyal and it will come back to you in countless ways over the years.
4. Find people before their properties are in foreclosure and help them before a default notice gets published.
This one is probably the hardest and most time-consuming method, but it is one of the only ways to avoid the competition of lots of speculators that descend upon any published foreclosure like vultures to a fresh kill. Speaking of which, you don’t win in this business by treating people like roadkill. Remember that your reputation is everything, and act with integrity.
People facing foreclosure are in very difficult circumstances, and they need help – not predatory behavior. When we’re able to help people negotiate short sales, lease options, and other complex transactions, everyone wins – and no one loses. Behaving with integrity helps us to get amazing referrals and special deals that never hit the open market. People remember what we’ve done for them, and when their friends and family need similar help they send them to us.
5. Find niche specialists like our firm who know how to find foreclosures in Pittsburgh for you.
We’re not real estate brokers, so we don’t sell information or give away crummy lists.
The properties we advertise are our own investments, so it’s a short but exclusive list.
We’re focused on building a small, tight network of long-term investors who want to purchase credible real estate investments in Pittsburgh. We find deep discounts and pass them along – while keeping a reasonable return that allows us to stay in business.
Sign up now, and we’ll send you great deals as we lock them down – we don’t spam or sell your information to anyone, and you can cancel anytime.
Residential vs Commercial Hard Money Loans
Are you wondering what the difference is between Residential vs commercial hard money loans? Look no further because we’ll help you out in this informative blog post that should answer all of your questions. (And if you have any more questions, feel free to reach out to our friendly and helpful team at (412) 529-1783!
Real estate investors acquire properties, they fix them up and either sell them or rent them out to tenants. This sounds like a great strategy to make money (it is!) but the problem is: it can be VERY capital-intensive, which means it can take a lot of money to run and real estate investing business – and that ties up your money for a while (and what if you need that money?)
Worse yet, investors discover that they can only grow so far using their own capital. Even if you don’t mind your money being tied up, you can only do so many deals at once. If you want to grow, you need even more money.
That’s why many investors are turning to hard money loans as a source of capital to help them. A hard money loan is a special loan for investors to help them acquire properties and renovate them.
Perhaps you’ve been researching hard money loans and are wondering what the difference is between residential vs commercial hard money loans, and which one is right for you.
The answer is that it depends on a lot of situations, but here are some general rules of thumb to help you…
It partially depends on the end-use of the property. Is the property going to be a place for people to live? Or will they be working there? In general, if someone is going to be working on the property, it’s very likely a commercial loan. If someone is going to be living there, then it could be a residential or commercial loan…
If people are living on the property, then it comes down to the size of the structure. A single-family home, or perhaps a duplex or triplex, might only need a small amount of repairs so a smaller loan is necessary. This will end up being a residential loan. However, if it’s a large multi-family unit, such as a condo or apartment building, then it will probably be a commercial hard money loan.
Other factors that could determine whether it’s residential vs commercial hard money loan include: whether it’s a new development or a smaller renovation of an existing property; whether it’s a structure or a set of structures (such as a mobile home park), and what the end-use will be (such as if you’re renovating a house to be a retirement home for several non-related renters).
Summary
Which do you need? Residential vs commercial hard money loans? It depends on a lot of factors so be sure to reach out to us and tell us about your project and we can tell you what kind of loan will help you the most.
Why Real Estate Investors Should Consider Lease Options In Pittsburgh
Real estate investors across the country are turning to lease options in order to sell properties. It can bring in more cash in the long run and will give you the power and flexibility to focus on other investments in the meantime. In our latest post, we explain why real estate investors should consider lease options in Pittsburgh!
As a real estate investor, you may have a property you want to sell but haven’t been able to unload at the price you want. It happens all the time but you don’t need to take a loss. By utilizing a lease option, you will be able to get the price you want, bring in extra income, without any risk. Keep reading to learn more about how lease options can benefit you!
Sell For The Price You Want
When you list a property in Pittsburgh, there are no guarantees that you will get your asking price. You may find your property sits on the MLS stagnantly, forcing you to drop the price. By utilizing a rent to own, or lease agreement with a potential buyer, you will be able to receive the price you want. You will set your sale price in the beginning, letting the tenant know what they should expect. While they might try to negotiate the price, they don’t have much bargaining power, so what you ask for, you will likely get. The only thing to be aware of is any major market fluctuations while the agreement is in place. Even if prices rise dramatically, you will still need to sell them the home at the originally agreed-upon price. On the flip side, if the market drops, you will still be able to get today’s price for it.
Generate More Income
Each month the tenant will pay you a higher than average price to rent the home. In some agreements, a percentage of this amount will go towards the down payment. In other cases, it does not. This all depends on the terms of your agreement. Either way, you will be generating more monthly income from the property than if you were to simply rent it out. You will also guarantee yourself a tenant over the lease term. They will have a sincere interest in the property, not wanting to break the lease for any reason.
Other Benefits
With this greater interest in the property, you will find that your tenants will take extremely good care of the home. They will treat it as if it were there own, making the repairs and ensuring all maintenance is being taken care of. Some tenants will even want to complete upgrades or special projects to the home while living there. Of course, this is subject to your approval, but it can’t hurt having them add value to the home in case of a default. You can rest assured that they will not cause damage to the home or allow it to become damaged, run-down or dirty. They will have much more pride in the home than just your average tenant.
No Risk
The tenant is going to do everything possible to make sure payments are received on time. If they default on their payments, the deal is off and you wind up keeping the additional amount they paid in rent each month. If this does happen, you can then opt to relist the property, with a whole new pool of prospective buyers. If it still isn’t the right time, you can find another candidate for a rent to own agreement. Either way, you will come out ahead.
3 Potential Disadvantages Of Using A Hard Money Lender in PA
Should you get hard money loans for your real estate investing? In this blog post, we’ll answer that question for you by sharing 3 potential disadvantages of using a hard money lender in PA to help you decide whether hard money loans are right for you.
Real estate investors prefer not to tie up their own capital in a real estate deal but instead, they’ll use other money sources to help them do deals. There are many money sources, and hard money lenders are one such source.
There are good hard money lenders out there and hard money loans are a common way to invest. However, every investor needs to decide for themselves if a hard money loan is right for them. To provide you with a balanced view, consider these 3 potential disadvantages of using a hard money lender in PA.
3 Potential Disadvantages Of Using A Hard Money Lender in PA
Disadvantage #1. Pay Back With Interest
A hard money loan is just that – a loan. And loans come with interest, which is the lender’s way of making money for the service they provide. There’s nothing wrong with them charging interest for the loan but you need to be aware that the interest exists and you need to factor it into your accounting. Are you prepared to make principal plus interest payments?
Disadvantage #2. Need More Money
Another disadvantage of hard money loans is that it’s not a bottomless pit of money. You need to figure out ahead of time how much money you need and then you need to borrow that amount of money. Problem is, what if you counted wrong and need more? Either you go back and apply for more or you look somewhere for the extra money.
Disadvantage #3. Return On Investment
When you borrow money and have to pay it back with interest, this could potentially delay or reduce your return on investment. For example, if you borrow money to fix up a rental property and then rent it out at $500 a month, any hard money loan repayment of $500 a month will prevent you from seeing any return until the loan is paid off. (These are just example numbers and of course, you should structure every loan in a way that makes sense for you.)
Summary
Hard money loans are one of the many investment tools. They have many advantages to help real estate investors run and grow their business by doing more deals. And just so you know – we actually like hard money loans and believe in them. However, it’s important for every investor to know all the facts up-front, and this information about 3 potential disadvantages of using a hard money lender in PA will help you figure out if they’re right for you.
Real Estate Investing Resources in Pittsburgh
So you wanna get started investing in Pittsburgh and you’re checking things out, eh?
Good for you. Always do your homework and you won’t get schooled.
Here are some great tools that we’ve found and we use from time to time and great real estate investing resources in Pittsburgh for investors here locally to tap into for quick research on your investment deals.
The best thing is most of these sites below are completely free!
Here are a few sites you should get to know:
1. Zillow
Zillow is the biggest, baddest real estate website on the block. They are building data on real estate wealth like few other sites.
The CEO of Zillow, Spencer Rascoff, said their company’s best asset was their “living database of all homes”.
The Zestimate tool is off, as a lot of folks have noted. It’s fun to see what the computer calculates, but you still gotta know how to analyze the comps and evaluate the market for yourself.
Spend a lot of time on Zillow and get to know the intimate details of each property sold in your target Pittsburgh neighborhoods. Really try to identify the psychology of the prices, and seek to understand why the seller and buyer picked that point to settle.
Remember, each sale is like a tiny piece of a moving puzzle that makes up the whole market.
Zillow is an awesome tool for investors to get to know their markets.
2. Craiglist
Craigslist is an awesome site. There are huge deals there if you spend the time on the site. People write terrible ads for great properties. Happens every hour of every day across PA. Sometimes the best properties only get one terrible ad. So you’ve got to scour.
3. LoopNet
LoopNet is the granddaddy of commercial real estate investing.
You wanna sell a gigantic freakin building to institutional investors, this is the site you want to list it on.
Sometimes there are great deals on LoopNet, but you’re competing with every other investor to find them. If you are a Grade-A investor working with a top broker, you’ve got a chance to win the bid and seal the deal. This is not the site for rookies.
LoopNet is a great place to learn about the market in Pittsburgh and see how the major money is moving. You’ll be surprised what you can learn, so start searching through the properties for sale and watching where they close.
4. Auction.com
Just like its name suggests, Auction.com is a big clearinghouse of auctions, — foreclosures, REOs, short sales, distressed properties, land, new construction — you name it, they probably sell it.
Definitely check out the auction calendar, and make a trip to visit some Pittsburgh auctions. You never know who you might meet at an auction – maybe your future business partner?
5. Realtor.com
The largest place to search the MLS (multiple listing service), Realtor.com is sometimes confusing and often doesn’t seem consistent with what data it displays.
But it’s got some neat search alerts and other tools that help you get alerted when a broker in your neighborhood has added a listing. If you’re serious about investing, you probably want to form a good relationship with an excellent Realtor, rather than just the website.
6. Walkscore.com
Most investors overlook Walkscore.com – a big mistake.
Walkscore tells you a ton about any given address. It tells you how a potential renter or buyer will evaluate it – what’s nearby and how long it takes to access.
It’s also a fantastic tool to target areas that are underpriced for their amenities. If an area has a really high walkscore and low prices, chances are good that prices will rise in the next few years. There are big exceptions – but walkability is a really key factor in Pittsburgh investment.
Those tools will help you to understand the Pittsburgh area market if you take the time to use them. Do your homework, and understand the market before you start dumping your hard-earned money into a property.
You can always give us a call (412) 529-1783 – we love to partner up with investors, and we’ve got great terms.
What Will Buying An Investment Property In Pittsburgh Really Cost you?
Are you interested in buying an investment property in Pittsburgh or the surrounding areas? Before you agree to purchase, take an inventory of all the expenses you are likely to encounter. In our latest post, we will explore some of the costs you can expect when buying an investment property in Pittsburgh.
Buying an investment property in Pittsburgh is a great way to increase your income; however, it is important to be prepared for your purchase by understanding all associated costs. Below we cover a few of the different types of expenses with a general idea of what you can expect to pay.
Down Payment
Investment properties are not eligible for FHA loans unless you are buying an owner-occupied property with 1-4 units. If you are not planning on living in the home yourself, you will likely need to use a conventional loan, which will require up to 20% down. The larger down payment you are able to make, the less interest you will need to pay in the long run. If you are able to pay in cash, even better. Cash is king & you will eliminate interest expenses and likely be preferred over buyers who require financing. Paying in cash will allow for a quick closing and lower the odds of the sale falling through due to a low appraisal.
Closing Costs
Typically, closing costs will run you about 2-5% of the final sale price. Closing costs will include things like title search, title insurance, transfer fees, legal costs, and administrative fees. Buyers are not always prepared for these additional costs, so make sure you have budgeted for these ahead of time. You can also negotiate with the seller to arrange for them to cover a portion of these costs or possibly pay for closing completely.
Property Management
You may be able to handle one or two properties on your own if you are experienced and know what you are doing… and live nearby; however, once you find yourself owning a few properties or properties out of the area you live, it will likely be time to bring in a property manager to help you with some of the associated tasks. Your property manager can help schedule repairs, handle tenant complaints, and be responsible for collecting the rent. In exchange for their services, you can expect to pay around 10% of the amount you are collecting in rent each month. With that said, the right property management company can be worth their weight in gold.
Taxes
Depending on where you live, property taxes can become a big factor when it comes to calculating your profits. Make sure you know the tax history of the property and any local changes that will affect the amounts you are paying in the coming years. You can look up the tax history on the property appraisers site and even sites like Zillow. Use a property tax estimator or the Allegheny County Assessment and Property Tax Calculator to find out what you might be in for in the upcoming year. If your margins are slim and you are stuck with a property tax bill costing thousands of dollars, the property may not be the right one for you. Don’t get hit at the end of the year with a high tax bill simply because you failed to research ahead of time.
Insurance
The insurance you carry for investment property will be different than your standard homeowner’s insurance policy. It is recommended that you carry $500,000-$1,000,000 in liability coverage. The policy will likely be more expensive than what you pay for your own home. It is important to make sure you have landlord protection in case you are ever sued by a tenant or someone else in regards to the property. When adding up the costs for the home, do not neglect to include your insurance expenses.
Maintenance & Repairs
Maintenance and repairs should never be overlooked when considering the true costs of your investment property. A good rule of thumb is to budget 1% of the property value for the minor repairs needed each year. You will also want to set up an emergency fund for the larger repairs that will be needed over time. You will want to have the money available if something major breaks or for when you require a major repair like a new roof, etc.
Tenant Screening
While this might be an area where you feel you can save a few bucks using your good old intuition, now is not the time to be frugal. It is extremely important to conduct a full background check on every single person applying to live in your house. Even if you already know them, and even if they are a friend or family member. Get a background check completed. Many landlords find themselves stuck with bad tenants all because they failed to spend the time and money to fully screen their tenant. Many hassles and expenses can be avoided with a fast and thorough background check.
How To Choose The Right Neighborhood For Your Pittsburgh Investment Property
Ready to buy an investment property in the Pittsburgh area? The location of the property will have a huge impact on what kinds of profits you will be able to attain. In our latest post, learn how to choose the right neighborhood for your investment property in Pittsburgh.
When deciding where to buy, it is important to consider more than your opinion of the area. While you should like the neighborhood, it needs to be a hit with potential renters too. Some of this can be judged by putting your feet on the ground and exploring the neighborhood for yourself. For other things, you will need to take a look at the numbers. Keep reading to explore our tips for choosing the right neighborhood for your Pittsburgh investment property.
Demand
What does the rental market currently look like? Are there many homes available for rent? If so, it will tell you that the demand is low, and you will possibly have trouble finding tenants for your property. Ideally, you will want to have a property in a high-demand area. There should be a few, well-priced rentals or listing on the market for you to compete. Having the right property in a high-demand area is sure to generate profits for years to come.
School District
Even without kids, living in an area with a good school district will help to ensure you are in a quality neighborhood. There are many ways to check out how schools in your buying area are ranked. Great Schools or Best School Districts in the Pittsburgh Area is an excellent resource that offers rankings based on a number of factors. It is a great way to get a quick snapshot of the schools in your area.
Job Market
The area in which you buy your investment property should have a strong job market with even more growth on the horizon. This ensures that your tenants will be able to find a long-term and well-paying job. These are all critical considerations to think about if you plan on receiving your rent payment each month! You can check with the local chamber of commerce, local classifieds, and the US Jobs Report to get a better understanding of employment in your area.
Convenience
The property should be in a convenient location. You will attract many more prospective tenants and/or buyers in a place that is easy to get to than you will in remote locations. Shops, restaurants, and access to major roads are all great things to have nearby. Walkability is a huge factor nowadays and can really increase the response to your property. A property with many shops and things to do in the area will be much more in demand than a house located in the middle of nowhere.
Public Transportation
More and more people are choosing to rely on public transportation to get around. If there are viable options within your city, make sure your property is in close proximity. Many renters, especially those of younger generations, will be looking for houses specifically with easy access to public transportation. Whether it be a train, subway, or bus-line, being able to get around without a car is becoming more and more appealing.
Neighborhood
You want to purchase a property with a great neighborhood and lots of things to do socially. There should be great parks, sidewalks, and other amenities that make people want to be there. If possible, stop to chat with neighbors you see out and about. Of course, you do not want to bother anyone, but if you are able to get the low down from a local, you will be more likely to find an awesome property in a great location. You will also be able to get a feel for what your neighbors may be like. Some people like a neighborhood where everyone knows everyone, while others prefer a more quiet and private space.
Crime Rates
Nobody aims to live in a high-crime area. While you will likely be able to find affordable properties in these areas, you are not as likely to find buyers or tenants who want to live there. Check out the crime rates for your neighborhood using sites like Crime Reports and Neighborhood Scout can give you a good idea of what to expect in your area.
Future Development
Before buying, do as much as you can to understand what future development in your area will look like. New homes and businesses will have an impact on property values and the amounts you are able to charge for rent. Check with your city and county to learn more about development plans for your area. Buying in a hot up and coming part of town is an excellent way to secure high a return on your investment. By understanding what's coming, you’ll be able to find the property that is right for you.
A Buyers Guide To Lease Option Properties in Pittsburgh
Do you want to buy a home but you aren’t quite ready? If so, a lease option may be the opportunity you have been looking for. Learn more about lease option properties and how they can help you reach your real estate goals!
Using a lease option is an excellent solution for would-be buyers. Maybe you have a blemish on your credit or maybe you don’t have quite enough saved up for a down payment. Using a lease option, or rent to own structure will allow you to lease a home, with the option to buy or walk away after the lease term is up.
How It Works
The agreement itself is often similar to a rental agreement with an option to buy at the end of the term. That said, there are some key differences to be mindful of, such as your responsibility to make repairs, and a higher than average rent payment each month.
What You Will Have To Do
You will always want to have a thorough inspection of the house done before signing the agreement. This will give you a heads up on any future repairs you will need to make. Some repairs are very expensive and you may not be comfortable taking on a property with such large issues. You should also have a professional appraisal of the house done. This will ensure that the price the seller is asking is fair, and will be approved by a lender in the future. You never want to skip an inspection or an appraisal just to get a shot at buying a home.
Also, as mentioned above, you will be the one responsible for repairs as opposed to the owner of the home. You will also need to pay the property taxes according to some agreements. These extra expenses, plus the typically higher than average rent, can slow you down if you are saving to buy the property in the future. Keep these costs in mind before signing an agreement.
The Benefits
There are several benefits to entering into a lease to own agreement with a local seller. First of all, you will be able to find and secure a house before you have the down payment together or before your credit will qualify for a loan. These are both things that should be taken care of during the leasing period of your agreement. You will also have a locked-in price, so if the market goes up over the course of the agreement, you will only need to pay what was agreed upon originally. Just watch the market beforehand. You don’t want to enter into an agreement in an area where homes are actually decreasing in value.
Another great benefit is having the ability to “test drive” the house. You can really get a sense of what it will be like to own, before actually being the owner. You can determine your monthly maintenance and ownership expenses, and take a good look at commute times and area schools. You will be able to make sure that the neighborhood is really right for you, eliminating any chance of buyer’s remorse once the sale date arrives.
You will also have the peace of mind in knowing that you have the guaranteed option to buy the house. You won’t need to pick up and move at the end of the lease term so long as you are able to get the financing you need, as well as the down payment. Your credit should also be restored, allowing the buying process to run smoothly for you.
One great trick is to find a property that has been listed for a while and purpose a rent to own agreement. They will not need to lower their prices, and you will get the opportunity to buy a house you love.