DONíT OWN......... RENT !!!!!
Such blasphemy! What kind of successful investor would advise anyone to rent instead of becoming an
The answer: a smart one!
What if I showed you a way to profit in real estate without large cash deposits; not having to apply
for bank loans, no overhead, no maintenance, no taxes, insurance or homeowner fees to pay. You would
probably say that that type of investment doesn't exist or that such an idea is the product of the
authorís wild imagination.
Well, itís time to learn about the best kept secret in real estate: itís called Lease Purchasing,
known also as Ďrenting to owní or Ďleasing with an optioní. Anyone can control real estate that generates
immediate positive cash flow without having to become a real estate expert or by having to look at
hundreds of houses. If you know how to rent, then you can put together all kinds of profitable cash
generating transactions with just a telephone.Lease Purchasing allows you to create small and large
deals without going to the bank.
Why Lease Purchase? Controlling real estate through Lease Purchasing, whether itís for your own home
or as an investment property, is by far the superior method of finance.Lease Purchasing helps to
remove the traditional adversarial relationships that exist between buyer and seller and produces
In most real estate transactions there is a natural tendency between the buyer and seller to try
and beat each other up. One wants a lower price and the other wants a higher one. Not to mention all
of the other items that have to be negotiated. Next come all of the difficulties associated with
deposits,qualification, appraisals, title companies, lenders, escrows, lawyers,etc., etc. Lease
Purchasing eliminates these problems and lets the buyer and seller have a win-win experience and get
the deal done.
A Lease Purchase is a process where a rental agreement is combined with a purchase or more
specifically, an option contract. Price, length of contract, escrow instructions, rent credit and
other pertinent terms are all negotiated in advance. The tenant/buyer has a percentage of his
rent credited to the down payment or off the price. In many cases, more money is being applied
monthly, than an actual mortgage payment would be to the principle.
All the parties concerned can benefit by doing a Lease Purchase transaction.Letís examine the
advantages for the buyer, seller and investor .
From the Buyerís Viewpoint:
Generally, this is a renter who canít purchase a home through conventional means. This buyer does
not have a large enough down payment for a bank loan,minor credit problems, a new job, high loan
to debt ratio or other make a traditional purchase of a home impractical (impossible)
at this time. This time is aware of the advantages of home ownership (tax shelter,appreciation,
security, etc.) and is eager for a chance to get involved in a home of his own and get out of the
rental rat race. Our buyer can reason that lock in the future purchase price even though ownership may not
transfer for a year or more. A percentage of the rent can be credited toward the downpayment or
off the price. During the terms of the contract, the tenant/buyer has time to check out the house,
neighborhood and to obtain the best financing.
From the Sellerís Perspective:
If you are a seller and the market demand is very low for your property, the best way to get your
full asking price would be to Lease Purchase your home.Since you are being flexible on your terms
you are entitled to get your full asking price and a higher than average or premium rent for your
When you find a prospective buyer/tenant you normally receive option consideration. This is a
nonrefundable amount, that in many cases, can be several months rent. If and when the buyer wishes
to utilize her option, then you will hopefully receive your capital profits when escrow closes. If
the buyer, however, allows the option to expire you also win since you can begin the whole process
all over again and either renegotiate the contract or find anew tenant. In either case, you receive
more option consideration for the same property. If the property sells, then you use some of your
profits to reinvest in another house. The potential for profit for the seller is fantastic since a
well negotiated deal will always reap profits at every stage of the Lease Purchase.
From the Investorís Viewpoint:
The Lease Purchase has everything an investor needs to make prudent,profitable investments in real
estate. Utilizing very small down payments(1-2%), an investor can control properties that normally
require 10-30% down without utilizing a lender nor going through the loan application circus.
A good deal can generate profits three different ways:
Other strategies involve the assigning or flipping of the optioned property to a third party or just
being a consultant for the buyer and seller and retaining a portion of the option consideration.
- Cash upfront with option consideration
- Cash monthly (rent)
- Cash at the close (or a first class note)
In summary, controlling properties by renting with an option (LeasePurchasing) is the absolutely
best way to be involved in controlling homes andobtaining great cash flow, high profits and minimum
risk. Lease and obtaining be the best way to create quick cash flow for the first time homeowner
or the seasoned investor.
Diamond Consulting Group
Success, One Person at a Time !
Claude W. Diamond J.D.