In today's market that seems to be flooded with homes and now deals, selling your home is becoming increasingly difficult. In one of our recent blogs PRICED...TO SELL vs. FOR SALE! What is YOUR home? We discussed some market proof techniques to selling your home. Well, the reality of that particular situation is that SOME homeowners JUST CAN'T implement that technique. Well, if that's the case, then we need to look at some "NOT-So Risky" Alternatives. My Answer is the LEASE OPTION! The Lease Option option is one of the least riskiest alternatives to selling in ANY market.
In MY Opinion...I see the Lease Option as one of the best investment strategies for investors due to the fact that it is the least riskiest. I view the Lease Option to be the least riskiest due to, if structured properly, you are virtually free of all risk. Essentially, the Only risk that one would assume is the fact that someone lives in their home that does not own it. Basically called a Lessee (Someone who received a lease on a property). I choose not to call them a tenant because the person that you are looking to emplace in your home on the lease option option is NOT a tenant. To me, a tenant is someone who looks to just rent your home with no intention of purchasing the car, therefore has a different mentality when living in your home. Tenants usually only have to put 1-2 months (2 months max due to state regulatory laws based on the state you live in. Here in SC, a landlord is only allowed to take maximum 2 months security deposit). On a lease option structure, there are no regulatory laws that restrict you from charging as much as you want on what we are going to call the NRLOCF (Non-Refundable Lease Option Consideration Fee). This is a FEE (non refundable) that allows a "Lessee-Buyer" the OPTION to purchase the home in a specific period of time. For me, I usually charge a certain percentage of the agreed upon purchase price.
Now, there are a few different factors that must go into consideration when properly structuring a LEASE OPTION that will properly protect you the seller.
Here's the one thing that makes the lease option the best viable option when one is unable to sell their home due to personal situation in a declining market. 1. You provide a means of housing for a low downpayment to someone who WANTS to own a home, but just can't due to a fe different reasons which put you in a position to control the price. 2. You get to still own the home and wait out market conditions to sell. 3. The Lessee -Buyer has a Buyer's mentality so they are more than likely going to take care of the home like it's theirs.
Here's the best analogy that I can best assimilate a Lease Option structure to...Leasing a car. You drive it off the lot, you tell everyone it's YOURS...You brag about it, YOU maintain it, YOU pay for everything and after the time period agreed upon, you can purchase the car. If you choose not to, you walk away from everything that you have invested in the car and the dealer makes out in the end...It's the SAME THING with a lease option. The lessee-buyer agrees on terms with the lessor-seller, moves into the home, tells everyone it's THEIRS, they pay for all that happens within the home & anytime during the agreed upon time period, they can purchase the property, but should they decide to walk away, they walk away from everything they have invested in the property...including the NRLOCF (that remember was a % of the sales price). This is where you want the payment to be a bit hefty so they have to think twice about walking away, but you want it to be low enough where it benefits them to lease option the property rather than purchase something else. For more information and a complete detailed explanation on LEASE OPTION structuring or assistance with Homes for Sale in Myrtle Beach or Myrtle Beach real estate in general, feel free to contact me anytime.
Christopher.Hart@Hartrealtyonline.com
843-903-HART (4278)
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