Advantages Of L/Oing? Expert Advice Needed
If any if you L/O pros wouldnt mind explaining to me, could you please tell me what the advantages are of L/Oing a property rather than just renting/leasing it and letting it appreciate in value? What is the advantage of leasing it to someone and then giving them the option to buy the property after a given term?
Also, at the moment I an currently purchasing a home in Aliso Viejo, CA for 590,000, it is a single-family detached home w/ 3 bdrms and 2.5 baths, nicest lot in the tract w/ beautiful backyard and fully upgraded interior (new walls,a/c, slate flooring, etc...) What would my options be for turning this property into an investment property after a couple years? I would imagine it would be hard to find a renter that would pay around 3k/mo to rent just so that I could break even each month... =\
Any advice would be very much appreciated!! thanks guys! :-D
I will stick to the second half of you post.
You are largely correct about the rental market for your present home. Check the local property management firms for what they think will work. For the most part, as you go up in price you find many fewer renters. Most are short term corporate relocation types or other folks who have a specific reason for being between homes.
In my case it made more sense to see my residence and then buy property that was more down market and better tailored to the rental market (number of bedrooms and baths vs. what I ended up selling).
I was moving to a lower cost area so I could get another home and buy an investment property.
John
[addsig]
so what are my future options for this home?
I know I won't be keeping it forerever, would it be a good idea to L/O it in the future? Or just straight-sell it? I want to live in this home for a couple years yet I also want to maximize profit when the time comes, thanks for the input!
c'mon guys gimme some support!
As the seller you can obtain TOP price for your home by using the L/O strategy.
[addsig]
Thank you for the replies, however, my question is, what would the best L/O strategy be for such an expensive home? I am kind of new to L/O so if you guys wouldn't mind a step-by-step walk through, that'd be much appreciated! :-D
With a lease with option to purchase you can up your income by structuring the option consideration to be paid monthly so that option consideration + lease payments may make it closer to break even. The option consideration is tax deferred until the option is exercised or abandoned.
Bottom line is that this is probably not a good investment property because of the price to market rent ratio being so high. You may be better off selling it after you reside in it for a few years and then buying a more appropriate investment property.
Thank you again for the replies.
Do you guys know if i were to ever L/O this house, would the lessee be the one to pay all the Insurance, fire ins, mello roos, and all the extra stuff? Or would it stil be out of pocket for me?
That depends on what you write in the Contract; however, it is not wise to have the T/B pay for any of that. Charge higher rent, but don't let the T/B directly pay the taxes and insurance.