Rent To Own - What Is A Lease Option

A rent to own is a type of contract used in residential real estate that is typically held between two parties. One, the tenant (who is also called the lessee), who will occupy a house or an apartment, and the landlord (lessor), who owns the homes for sale. A rent to own house is one of the many ways in which you can buy a house even with bad or no credit. It is addressed differently as lease option, lease purchase, lease to purchase, rent with option to buy and rent to own.

In the duration of a lease option, the tenant will pay credit to the landlord towards the value of the rental to own, and is allowed to occupy the house in exchange for the credit. When the contract ends, the tenant has an option to make an outright purchase of the apartment. Tenants typically obtain the money for this, by way of mortgage.

In this rent to own option, the tenant pays to the landlord, over and above the usual market rent. Excess credit may also be levied to the eventual purchase of the apartment, or towards the down payment in getting a mortgage. This is one of the lease options that work as an automatic savings plan for the tenant.

Things To Know

There are a few differences as far as rent to own and lease option agreements are concerned. It is essential for you to clarify these as these terms are used interchangeably in the rent to own industry. In case of a rent to own option, the buyer will make an agreement with the owner that some or all of the rent money goes toward the down payment of the apartment.

This will happen at a fixed date 2 to 5 years in future. The person paying the rent will then purchase the apartment by using the money that was set apart as down payment. If the tenant does not purchase the rent to own apartment at the end of the lease, then all the money paid by the tenant, in addition to the market rent will be retained by the landlord.

Advantages

The money put in at the beginning is not much in a rent to own option, apart from what is needed for a rental home. This is a nice way to get into an apartment with little or no down payment.

The rent to own option carries lesser risk to a landlord than a mortgage would for a lender. Its easier and cheaper to get the tenants to evict, rather than a foreclosure on a mortgaged property.

Another advantage in a rent to own situation is that the money you end up paying over and above the rent for possession of the house is relatively lower than taking out a loan for it.

As you can see, there are many advantages to a rent to own option, hence it is definitely a sensible one to go in for.

Rent To Own - Home Ownership With No Credit Or Bad Credit

Home ownership with no or bad credit may seem like a distant dream to you. You would think how would you ever be able to own a home with no or bad credit? You think the only solution to get home ownership with no or bad credit maybe to wait until your credit scores improve or you have saved enough money for a substantial down payment.

Good News!

However, there is some good news! Home ownership with no or bad credit is also a possibility! 100% financing is no longer only for those with perfect credit. In fact there are plans which are specially designed for those with bad credit. These are known as bad credit loans.

Few Key Requirements

This means that even if you have bad credit, you can still purchase a home. You may not have to pay a single penny for the down payment! Imagine, you can buy a home within a month, where you thought you may have to work for a long time for credit repair! There are a few requirements however for a 100% bad credit mortgage.

1. You must have a minimum credit score of 580.
2. To get home ownership with no or bad credit you must not have more than one late rent or mortgage payment in the last 12 months.
3. You must have sufficient income. This income must be enough to easily pay your monthly payment credits and mortgage. Your monthly debt must not be more than 45 to 50 percent of your total monthly household income.

If you meet the above requirements, home ownership with no or bad credit is no longer a distant dream to you!

A Few Solutions

There are a few things you can do to get home ownership with no or bad credit.

1. Keep it in your family: You can ask a relative who has a good credit history to buy the home on your behalf. This person will get a good interest rate. This will make your monthly payments mortgage payments more affordable. Once your relative has closed on the house, you need to take over the mortgage payments, the insurance and the taxes. This will get you tax benefits.

2. Rent to own: This is a great option if you do not have enough to buy a home and you want to get home ownership with no or bad credit. In this, you pay the landlord a little more over and above your monthly mortgage payments. With your bad credit history, this is better, cheaper and more effective than a loan.

3. Get the seller to finance: Since you have a bad credit history, you can get the seller to finance your home purchase. This way you can bypass the conventional loan if you have a motivated seller.

Hence, for those of you think your dream of owning a home is over it is not! You too can get home ownership with no or bad credit!

Wholesale Investor - Philadelphia Is A Real Estate Investors Dream Market

There are many reasons why Philadelphia real estate investing is a good idea. Philadelphia is one of the best places for real estate investment. This is one of the oldest cities in the United States. It has a history of immigrants dating back to as early as the 1500's. Even though there are reports about a down turned real estate market, this is the best time for you to get started as a wholesale investor. There are some factors you can consider when you think Philadelphia real estate investing. These are:

 How long do you want to hold on to the property?
 Which are the areas best suited for your situation?
 Your choice: That is whether you want to use your investment property for a "flip", or you want to develop it over a period of time, while renting it out.

Reasons

There are certain reasons why it is ideal for wholesale investors to venture into Philadelphia real estate investing.

 Architecture: You will find such historical architecture only in countries which have a longer history than the United States. These include Chile, Italy and Mexico. However, in the United States itself, not many cities have architecture like this. Real estate investing in Philadelphia is also of aesthetic value as the old buildings show the deep roots America has in history. This makes Philadelphia the birthplace of the history of the United States.

 Convenience: Another advantage for Philadelphia real estate investing is the convenience. Everything is at a vicinity. If you are in the heart of the city, you are close to restaurants, shopping malls, entertainment and a lot more. There are many entertainment options with clubs and bars along Columbus Boulevard, South Street and many other areas.

 The Value: Another reason why Philadelphia real estate investing is a great option is the value it offers. Real estate investing in Philadelphia has been really under priced for many years compared to its neighboring New York. You have many opportunities in Philadelphia real estate investing to buy your dream home anywhere in Philadelphia irrespective of the prices.

Areas of Investment:

For Philadelphia real estate investing there are many developing neighborhoods which you may want to invest in. These are the Art Museum neighborhood. This includes the communities of Franklin Town, Spring Garden, Fairmount, Francisville and Brewerytown.

For many Philadelphia real estate investors, the best neighborhoods are those which are in close proximity to the major medical schools in the city, including the Hahnemann Medical college, the University of Pennsylvania Medicine School, and The Temple University Medical School.

There are many profitable, cash flow opportunities for you as a wholesale investor in Philadelphia. Philadelphia real estate investing can be a highly lucrative option, but it is not risk free. It has all the aspects required for wholesale investors. It is convenience, it has a history, it has arts, architecture. It has entertainment, value and there are many reasons for real estate investing in Philadelphia.

Top Ten Credit Score Boosters

Credit score boosters are things that you can use to improve your credit scores. Your credit score is not only the numerical expression of your credit files, it represents your credit worth based on the information in your credit report. This is typically sourced from credit bureaus. You can use the following tips as credit score boosters:

 Pay on time: Negative items posted on your spotless credit score have a greater impact than those on a credit report which already has a history of late payments. For example, if you have a perfect credit rating and you are late to pay your car loan by, say a month, then the effect could be as great as a negative 25 to 60 points on your credit score.

 Removing the errors in 2 business days: You can be rest assured this is the fastest way to rectify errors on your credit report and increase your credit score. Hence, this acts as a credit score booster. However, you can only do this through a bank or a mortgage company.

 Deleting your negative credit: This is one of the most effective ways and acts as a great credit score booster. All you need to do is write a letter of dispute to the concerned authority to check credit. They have reasonable time, usually 30 days, to get back to you.

 Don't use finance companies: You need to know that the scoring system guys frown on finance companies. Never use finance companies for your credit repair.

 Use your credit cards: Your scoring model on your credit report takes into account how long it must have been since a certain account has been used. Credit lines which are used (assuming that they have paid in a timely manner) impact your credit score positively. Paying helps your FICO score. This acts as a credit score booster.

 Don't take any new credit: You must keep in mind not to take any more credit. Don't take any more credit on your credit card unless absolutely necessary.

 Different credit types: If your credit report shows different types of credits handled, you are rewarded with a great credit score. This is a great credit score booster.

 No bankruptcy or foreclosure claim: These will show on your credit report for 10 years! These will always reduce your credit score. The older they are, the more impact they have on your credit score.

 Pay your debts: This may seem obvious to you. But, it is not as simple as you think. You must never pay your revolving debt on time. Keep on paying it slowly. This demonstrates your ability to swiftly pay off accounts to avoid managing them. This will decrease your credit score slightly.

 Increase your credit card limit: High credit limits will help you to remove debt ratios, thus positively impacting your scores.

Thus, the above guidelines and steps will definitely help to improve your credit score and serve as credit score boosters.

Financing Your First Investment Property

Financing your first investment property can seem to be a daunting task. Its very important for you to be educated and prepared, before you go into commercial property investment. You can read books on property investments, investment property financing and real estate as a whole. You can also attend seminars and discuss with real estate professionals. Once you have received the education, you need to proceed towards financing your first investment property. There are a few things that need to be considered before commercial property financing:

 The Type Of Investment Property: What interests you? Are you interested in a duplex flat? Is it a multi-unit complex that interests you? You may also be interested in a single family home. You may also be interested in commercial property financing. This is a very important thing to consider while financing your first investment property. This will determine the rest of the factors. It is advisable to focus on one type of property in the beginning.

 The Type Of Area: It depends if you are investing in the city in which you live. If that is not the case, you need to decide, what part of the country will you be investing in? You can find all this information on property investments on the internet.

 Your Financing Strategy: Once you have decided on the type of property, you then need to calculate your assets. This will give you an idea of how much finance you require for financing your first investment property. If the property is a small one like a house, then paying outright may be a good option. Even if you don't have the requisite finance, but it’s a property that has made money in the past, the bank will provide for investment property loans.

 Your Team: This is a very important resource while you consider financing your first investment property. A team is a necessity. This is because of the large amount of work and financial expertise required to handle such a task. You don't have enough time to learn real estate law and accounting. You will also have to broker your own deals and manage your own property investments. Delegation is the key.

 Repair Cost: You also need to take into consideration the repair cost for financing your first investment property. This can also be a huge cost as you want to know whether you want to invest in old buildings or in new buildings. There might be a lot of upgrades required. You need to clearly know what you are getting into and whether you are capable of handling it before proceeding to financing your first investment property.

This is not all you need to know to begin financing your first investment property. Once you get into property investments, you will actually experience it. You will get to know many other things. But, these guidelines will empower you to ask the right questions at the right time. And, as you know, sometimes asking the right questions is even more important than the answers!

How To Find A Good Investment Property

If you really want to find a good investment property, there are certain important issues you should know. When you use accurate research and professional expertise for property investment, you build a solid foundation for financial success. You may want to work together with a realtor who can give you advice and identify great opportunities for buying investment properties. You can also choose to work individually. A realtor can provide the inside story on good investment property according to the specific geographical area. However, here are a few tips you can use for buying property hotspots.

Communicate: Let people know you are looking for property for sale. This way, sometimes the property will come to you. There are a lot of people who possess good investment property, but haven't yet listed their property.

Browse: The internet is one of the quickest and most effective tools to look for any information. You can refer a search engine for property buying. You can enter the city and the type of real estate you are looking for. You never know what property for sale you may find. The possibilities are endless!

Travel: You can also drive around your neighborhood to look for a good investment property. You may see many signs such as "For Sale by Owner". You won't see all the properties in the paper because many owners cannot or don't want to pay to keep the ads in the paper every week.

Look for abandoned properties: This can be your golden chance! This clearly means that the owner of the property does not want the property anymore. In buying investment properties which are abandoned, you will actually end up getting a cheaper deal.

Delegate and pay: If you look for a property on your own, the incentive you have is your monetary gain on the particular property hotspot. However, if you pay someone else to look for property & offer them a monetary incentive for their property investment advice, you are more likely to find a good investment property.

Look for eviction notices: Its extremely useful to keep yourself informed about eviction notices. This can be found out form your local newspaper or your courthouse. This is definitely a good investment property. A landlord who has just gone through the process of evicting his tenants is definitely sitting on a property hotspot. This is a property for sale which will definitely sell at a lower rate.

Look for old FSBO ads: it is definitely a good property investment opportunity if you can get your hands on one or a two month old "For sale by Owner" ad. A few owners give up the effort of looking for buyers after some time. However, they are still willing to sell and will most likely sell their property to you for a lower price. This is because you have come to them after they had almost given up.

With proper research and the right amount of effort, it won't be difficult for you to find a good investment property.

Buying Your First Rental

When buying your first rental property, you should ensure that it is the right one for you. This subject is often overlooked when you try to get results by making property investments. Rental property investment can be useful, but you must choose 3 things really well:

1. Your rental house.
2. Your agent.
3. Your location.

Here are a few things you can consider as a first time home buyer:

 Location: You must have heard it before that real estate is all about the location. This is even more important while buying your first rental property. If you plan to purchase a multi-family home and then to rent it out, you must find a place with a healthy and booming rental market. Rental houses in college cities and towns are a great idea! Most students prefer living either off campus or in the city in which they went to college. Other locations where rental houses are a good investment option are cities in general.(people prefer living close to where they work)
 Your Agent: You can also do individual research, but its better you hire an agent to do it professionally. When buying your first rental property, you can have an agent show you the rental houses in town. Then you can get a grasp on the market values of different houses of different sizes. Also give great attention to detail, while buying your first rental property. You need to pay attention to the amount of renovation done. A better renovated house is a better rental property investment than a larger house in a worse condition.
 Set up a budget: Before buying your first rental property, you need to fix up a budget for yourself. If you end up buying a rental house with a fixer-upper, you may not spend enough money initially. However, once you own the property, expect to arrange for some investment property financing to spend for repairs. When buying a fixer-upper, you as a first time home buyer must bring a knowledgeable contractor with you to estimate the repair costs.
 Get pre approved for a mortgage: You need to understand that mortgages for property investments are much more than residential property mortgages. Before buying your first rental property, you need to be aware of the fact that the down payments are often enormous.
 Know your tenant: While buying your first rental property, you need to know the people in and around the area. it does not matter if the rental house is in an area which is going to appreciate. You must ensure the people residing in your rental house are the kind who will treat your property with respect. So, you must try buying your first rental property in an area where you won't attract the wrong kind of renters.
 Motive: There is a motive behind every act. So, while buying your first rental property, try to find out why the seller is selling the house in the first place?

Buying your first rental property is not a big deal, if you understand the things we discussed above.