Benefits To The Homeowner?
I am very clear on the benefits to the leaseholder when they enter into a lease/purchase, but does anyone a concise list of the benefits to the property owner that would motivate them to lease to me so that I could turn around and sub-lease it?
Thanks in advance!
If your seller is "MOTIVATED" (eg. He/She is moving into new place and are going to be paying two mortgages, Pre-Forclosure etc. ), the benefit to them is that you are going to be paying for the mortgage for them. Almost as if they have their own tenant. (You should make it very clear to them that you are going to be subletting to somone else). They will, depending on your agreement, get either a buyer for the house at the end of your option, or they will get a house back that has, hopefully, appreciated in value. Here is an example.
John Q Public agrees to LO a property to you (He has to move out of State ASAP). You agree on a 6 year LO. The FMV of the property is 200K. His mortgage balange is 160K. His payments are $1100.00 inclusive of taxes, ins, etc. He would like 5K upon signing the LO with you at an agreed price of 195K.
You find Jane Q Anybody and her husband to LO the property from you. You have them sign an agreement for a 2 year LO at a purchase price of 225K, and monthly payments of $1500.00. They will also pay you an upfront option payment of $10K. You know the rest.
However if after the 6 years, no one exercises their option, you may sell the place yourself to another buyer after 6 years of appreciation, or give it back to John with 6 years of appreciation built in plus the reduction of his mortgage by 6 years worth of payments.
You saved his Credit by paying his mortgage, and put coin in his pocket.
Hope this helps.