What is a lease to purchase agreement

what is a lease to purchase agreement

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Lease 2 Purchase FAQ

Welcome to the Lease 2 Purchase FAQ. This list of Frequently-Asked Questions has answers to most of the common questions people ask about Lease 2 Purchase as it relates to real estate.

Section 1 of 4 - General Lease 2 Purchase Questions

Section 2 of 4 - Specific Lease 2 Purchase Questions

Section 3 of 4 - Lease 2 Purchase Handbook and FREE CD Questions

Section 4 of 4 - Questions About Me

1.1 What is a Lease 2 Purchase contract?

Simply stated, a Lease 2 Purchase contract combines a basic lease contract with an option to purchase contract, which creates a Lease 2 Purchase contract.

The tenant/buyer pays to the landlord/seller a nonrefundable option deposit that is applied to the purchase price of the home. The tenant/buyer then pays to the landlord/seller rent to compensate the landlord/seller for the tenant/buyer's use of the property.

Rent payments are usually made on a monthly basis. A portion of that monthly payment is often applied to the purchase price and/or the down payment of the home.

During the term of the lease, but before the option expires, the tenant/buyer has exclusive right to buy the home under the terms to which both parties have previously agreed.

1.2 What should I do first?

I get this question almost every day. The first thing you should do is read every page on this web site. After that, if you haven't already bought yourself a good Lease 2 Purchase course, you really should consider it.

The simple fact is, you can't learn the Lease 2 Purchase business in any university. Some gurus offer boot camps, seminars and mentoring, but they are ridiculously expensive and range in price from $1,000 to $25,000 and up. Therefore, the only way you can learn this business for a reasonable price is to get yourself a good Lease 2 Purchase course, study it, then apply it.

You won't find these courses in any bookstores or shopping centers. The only place to get them is on the internet or by responding to a television infomercial.

Most of these courses are good, but most of them are expensive. My course, The Lease 2 Purchase Handbook and FREE CD. is currently on sale directly from this web site for $97.

1.3 What are the features & benefits to me?

Without a doubt, the Lease 2 Purchase contract is the quickest, easiest and least expensive way to buy, sell and invest in real estate.

It replaces the typical adversarial relationship that usually exists between buyers and sellers with a win-win method of transferring real estate ownership. As a result, it is highly prized by those who know about its powerful features and benefits.

Specifically (if you're the buyer), you will have minimum cash out of pocket, credit problems are okay, faster equity growth, increased buying power, time to kick the tires and peace of mind.

Specifically (if you're the seller), you will have a top sales price -- even if demand is low, positive cash flow, the largest market of buyers, minimum risk, no realtor commissions, no maintenance, no landlording and (my favorite) a non-refundable option deposit.

1.4 What are the shortcomings?

There are only a few minor drawbacks, but you should be aware of them, nonetheless.

The first (if you are the landlord/seller) is an "equitable title" claim by your tenant/buyer. Any good Lease 2 Purchase course will teach you how to minimize your risk regarding this claim.

The second (if you are the tenant/buyer) is protecting your option. What if your landlord/seller disappears, dies, or decideds they don't want to sell? Again, any good Lease 2 Purchase course will teach you how to protect your option.

The third is the infamous Due-On-Sale Clause.

The Due-On-Sale clause is a non-issue. Here's why.

There isn't a single lender on the face of the earth that is going to enforce their Due-On-Sale rights on a mortgage that is performing (being paid on time). Why? Because lenders are in business to make money. If they enforce their DOS clause, they are essentially taking back possession of a property in order to sell it, more than likely for a huge loss.

Furthermore, lenders will only enforce their DOS clause for one reason, the payments are late. And guess what? If the payments are late, the bank is going to foreclose, not enforce their DOS clause.

And remember, there is no Due-On-Sale jail.

1.5 Will it work in my area?

Yes, it works very well in all markets, both hot and cold (and anywhere in between), and is perfectly legal in all 50 United States, Canada, Australia, the UK and any other country which has a free-market economy where lease agreements and option agreements are legal.

1.6 What about Canada, Australia, the UK or another country?

Yes, it's perfectly legal in all 50 United States, Canada, Australia, the UK and any other country which has a free-market economy where lease agreements and option agreements are legal.

1.7 How can I learn the Lease 2 Purchase business?

The simple fact is, you can't learn the Lease 2 Purchase business in any university. Some gurus offer boot camps, seminars and mentoring, but they are ridiculously expensive and range in price from $1,000 to $25,000 and up. Therefore, the only way you can learn this business for a reasonable price is to get yourself a good Lease 2 Purchase course, study it, then apply it.

You won't find these courses in any bookstores or shopping centers. The only place to get them is on the internet or by responding to a television infomercial.

Most of these courses are good, but most of them are expensive. My course, The Lease 2 Purchase Handbook and FREE CD. is currently on sale directly from this web site for $97.

1.8 How much money do I need to start?

Technically, a buck will get you started. Most experienced Lease 2 Purchase investors make a healthy upfront profit on every deal they do, therefore, you probably won't need any money to get started. However, if you're a beginner and you don't have any collateral for the option deposit, it would be to your benefit to have $500 - $2,000 in the bank. This money can be used for your option deposit, to cover late payments from your tenant/buyer or unexpected maintenance.

1.9 Is Lease 2 Purchasing legal?

Yes, it's perfectly legal in all 50 United States, Canada, Australia, the UK and any other country which has a free-market economy where lease agreements and option agreements are legal.

1.10 What is the difference between a Lease 2 Purchase, a lease option and a rent-to-own?

The truth is, there is absolutely no difference between a Lease 2 Purchase, a Lease Option or a rent-to own. A few people say there is, but they are wrong. Here's why.

When an experienced real estate professional talks about a Lease 2 Purchase, a lease option or a rent-to-own agreement, they are really talking about an arrangement that contains both a lease contract and an option to purchase contract. By definition, this is really a Lease 2 Purchase (or lease option or rent-to-own). Thus.

Lease + Option to Purchase = Lease 2 Purchase AND lease option AND rent-to-own

They're all exactly the same! Don't let anyone tell you otherwise.

2.1 How much should I charge for rent each month?

You can charge whatever you like. I suggest determining what similar properties in your neighborhood rent for, then I would add a little (maybe $50 - $300) to your figure. Remember, since you are offering the best financing terms anywhere, you have the right to demand a premium rental payment for your property.

2.2 How much should I charge for the option deposit?

You can charge whatever you like. I try to get as much as I can to ensure that my tenant/buyers are actually going to follow through and buy my house. A typical tenant/buyer will not walk away from anything more than $3,000, and if they do walk away, you simply keep their option deposit and find someone else who has a large option deposit.

2.3 How much should I give for the monthly rent credit?

You can give whatever amount you like. I tend to stick in the $100 to $200 per month range.

Let's do a quick example of how monthly rent credit works.

If you have a tenant/buyer who has contracted with you to Lease 2 Purchase your home for 12 months, you could give them a $100 per month rent credit. At the end of the 12 month period (the option period), they will have a $1,200 credit which they can use to either (1) reduce their closing costs or (2) reduce the sales price.

If you would like to raise your rent credit to make your property a little more marketable, simply raise your sales

price accordingly. For example, if you would like to give a $200 per month rent credit, simply raise your sales price by $1,200 ($100 increase x 12 months = $1,200).

2.4 How do I protect my option?

There are several ways to protect your option. First, you can record it in the public real estate records (usually done at the county courthouse). Second, you can create an escrow up front in which a title company or attorney holds the executed deed. Third, you can record a mortgage to secure the performance of the option agreement. A good Lease 2 Purchase course will explain these in greater detail.

2.5 What is the best way to advertise?

Let me share with you my simple recipe for successful Lease 2 Purchase marketing. Mix three parts local classified advertising with one part signs in the yard, one part flyers at local retail outlets and one part postcards to real estate professionals and you'll have a feast! With a little luck, you'll have your home sold within two weeks (or faster)!

2.6 Are realtors receptive to the idea?

Realtors who are uneducated on the subject believe they won't receive a commission if they list a home for sale by Lease 2 Purchase. The truth is, they will indeed receive a commission, but it will be delayed until the deal actually closes 3-24 months down the road.

Otherwise, most realtors are starting to catch on. Some states even offer Lease 2 Purchasing as a course for realtors continuing education credits.

2.7 Where can I get a credit report on my tenant/buyer?

The best place to get a credit report for your tenant/buyer is through a local loan officer. Tell this individual that you're an investor and that you'll be sending them business. They will be delighted to help you and probably offer to give you credit reports for free.

Alternatively, you can do a search on the internet for "credit report service." You'll probably come up with a dozen or more companies that charge between $15-$30 for this service.

2.8 Should I incorporate my business?

Incorporating your Lease 2 Purchase business will provide you with some solid protection for your personal assets in the event you are sued. If you're just starting out, I recommend holding off on this until you get a deal or two under your belt. Once you've decided that you like the business and you're going to continue on with it, then consider incorporating.

2.9 Who carries the insurance?

The insurance on the home is carried by the owner of the home (you cannot insure something you don't own, this is called "insurable interest").

The insurance on the contents of the home will be carried by whomever owns the personal property inside, usually the tenant/buyer. This is typically called renter's insurance.

If you are the middle-man in the deal (you're the landlord/seller, then you sub-Lease 2 Purchase to a tenant/buyer), you might want to get yourself a general business liability policy to protect yourself from any liability claims.

2.10 Who pays the taxes?

The person whose name is on the deed pays the taxes.

2.11 What is the Due-On-Sale clause?

It is a clause in a mortgage agreement providing that, if the mortgagor (the borrower) sells, transfers, or, in some instances, encumbers the property, the mortgagee (the lender) has the right to demand the outstanding balance in full. It is a contractual right, not a law.

Banks began inserting Due-On-Sale clauses in their mortgages in the '70s when interest rates rose dramatically. Home buyers were assuming existing loans rather than borrowing new money from banks because the interest rates on existing loans were lower. The banks used the Due-On-Sale as a way to kill their own worst competition.

The homeowners fought the banks in court claiming that the enforcement of the Due-On-Sale was "unfair trade practice." The consumers won, but the banks lobbied Congress to pass a federal law which would supercede the courts. The banks ultimately won and the "Garn-St. Germain Federal Depositary Institutions Act" was passed.

The Garn law gives the banks the right to enforce the due-on-sale, but it also carves a few exceptions in which the lender may not enforce it. One of those exceptions is that a homeowner may transfer title to a living trust for his own benefit.

The Due-On-Sale clause is a non-issue. Here's why.

There isn't a single lender on the face of the earth that is going to enforce their Due-On-Sale rights on a mortgage that is performing (being paid on time). Why? Because lenders are in business to make money. If they enforce their DOS clause, they are essentially taking back possession of a property in order to sell it, more than likely for a huge loss.

Furthermore, lenders will only enforce their DOS clause for one reason, the payments are late. And guess what? If the payments are late, the bank is going to foreclose, not enforce their DOS clause.

And remember, there is no Due-On-Sale jail.

3.1 Describe the Lease 2 Purchase Handbook and FREE CD.

I hold your hand through the entire process, step-by-step, whether you're buying, selling or investing in Lease 2 Purchase real estate.

The Lease 2 Purchase contract is the quickest, easiest and least expensive way to buy, sell and invest in real estate. It replaces the typical adversarial relationship that usually exists between buyers and sellers with a win-win method of transferring real estate ownership.

The Lease 2 Purchase Handbook and FREE CD was primarily written for beginners, while advanced users will enjoy the absolute best Lease 2 Purchase contracts in the business.

3.2 What is included?

Both the Hardcopy and the Download Versions include the following:

  • the Handbook (approx. 130 pages)
  • the FREE Bonus Forms CD
  • Live Support in my chat room
  • the Success Legal Forms Package
  • the Profit Calculators
  • the Easy Offer System

In short, everything you need to be successful is included in the package.

The suggested retail price is $147, but right now you can save $50 through Monday, August 31, 2015 at 11:59 PM. That's a total of $97 for everything, including my FIVE EXCLUSIVE BONUSES. valued at over $727.

3.4 How much is shipping?

Shipping is 100% completely Free.

3.5 How soon will I get it?

If you choose my Hardcopy Version, I ship it to you via 2-3 day U.S. Priority Mail. If you order my Instant Download Version, you will immediately be taken to my Lease2Purchase.com Command Center from which you will be able to download it within seconds.

3.6 What is the difference between the Hardcopy and Download Version?

Simple! The Download Version includes everything the Hardcopy Version does, but you will be reading it from your computer instead of holding it in your hands. The files from the Bonus CD, the Legal Forms Package, the Calculators, etc. are ALL INCLUDED with the Download Version. It's a personal preference issue; do you want to read it from the comfort of your computer chair or your couch?

3.7 Can I customize and edit your legal forms?

Yes, you can edit the forms with Microsoft Word or your favorite text editor.

3.8 Should I have the forms reviewed by a lawyer?

Yes, since landlord-tenant laws vary from state to state, your lawyer might add or delete a sentence or two.

3.9 What are the computer requirements of your FREE CD?

Any Windows, Mac, Linux or Unix computer with the ability to read .doc (Microsoft Word) and .xls (Microsoft Excel) files will do just fine.

3.10 Who was your course written for?

It was written equally for Buyers, Sellers and Investors alike. There are entire chapters dedicated to these exact situations where I hold your hand through the entire process, offering step-by-step instructions.

3.11 Whose course is better, yours or insert name here ?

They're all good, buy them all if you can. My course was written with a heavy emphasis on helping beginners, while advanced users will enjoy the absolute best contracts in the business. If you're a beginner, then my course is hands-down the best -- and is definitely less expensive.

Remember, you can't learn about this stuff in any university -- the only way to get the knowledge you need is through courses and experience. The more you have, the more successful you'll be.

3.12 Why should I buy your course instead of another?

  • It was written for both beginners and advanced users alike.
  • It is reasonably priced and comes with a Double Your Money Back Guarantee.
  • I hold your hand through the entire process, each step of the way.
  • It includes Free 24-hour support in my online chat room.
  • It includes the best (100% customizable) forms on the planet.
  • It's regularly updated so it includes the freshest information.

4.1 How long have you been doing this, Jeff?

Source: www.lease2purchase.com

Category: Credit

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