There is an old axiom: It takes money to make money. True in some cases, but it does not always have to be your own money. A creative, low-risk financial technique makes it possible to purchase real estate with little or no money down. The technique is neither new nor untested, it is simply not widely practiced. The technique is lease options.

Simply defined, lease options offer a purchaser the opportunity to purchase a piece of real estate on a rental basis. The renter signs a lease with an option to buy the property. The buyer gains control of the property without owning it. The agreement is a legal contract that consists of an agreed upon date of sale, the cost of the property and terms. The greatest benefit is that lease options create opportunities for the buyer when they do not have enough funds for a down payment and closing costs.

This leasing agreement does not only benefit the buyer, it benefits the seller. When markets are slow, these agreements open opportunities for more people to purchase a property with little or no money down.

If you are selling real estate, there are plenty of advantages for using lease options. Sellers are able to collect monthly rents that often exceed the going monthly rents. The lease option enables tax-free use of the option fee until the option is exercised or forfeited. Since the leasing agreement has been struck by a future owner, the property will be taken care of and the renter is likely to purchase the property.

Finding a Realtor who is experienced with lease options may not be easy. Unfamiliarity with these special leasing agreements can result in disaster. Some Realtors do not want to promote lease options because they need immediate income. While many do not realize the potential benefits for both the buyer and seller.

Learning about lease options and the power of these financial techniques will put you in the driver's seat when it comes to purchasing or selling real estate!

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