Many would-be real estate investors love the idea of getting great profits in real estate, but become markedly less enthusiastic when they consider the amounts of their own money they will need to risk in a traditional property purchase. For these investors ? and for any investors interested in controlling a property without putting any money down ? lease options are an excellent match.



Lease options, which are also known as purchase options or rent-to-own agreements, work because they allow an investor to control a property without actually buying it upfront, which means that there is little risk of money being lost right away. Despite the low risk, though, this type of investment can mean tens of thousands in profits for only a moderate investment of time.

This type of investment is very simple: the investor finds a homeowner who is willing to sell on flexible terms. Usually, the homeowner has been trying to sell their home for a while and needs to sell quickly, but is having trouble getting a decent price. The owner is not willing to greatly discount the asking price, but is willing to be more flexible in terms, so the owner and investor come to a purchase option agreement. In the agreement, the investor agrees to lease the property for the cost of the mortgage payments plus all other payments associated with the property. The investor also gets the option to buy the home for an agreed-upon price at the end of a specific period (usually 2 years or so). The owner does not have to worry about making payments on the home, and the investor can lease the property out to a tenant or interested buyer for $200, $300 or more over the price of what is being paid to the owner. The investor pockets the profit. The investor also has a rent-to-own agreement with his or her own tenants, so that if the tenants buy the property, the investor and the homebuyer both make a profit. For example, if the property is worth $200 000, and the investor agreed to buy it from the owner at $170 000, the investor can offer it, in turn, to the tenants for $190 000, and make a tidy $20 000 profit, over and above the money coming in each month from the lease.

Purchase options are great because they require so little money up front. Plus, they carry so little risk. If the tenants that the investor has found are not interested in buying the property ultimately, the investor can find another buyer or can simply return the property to the original owner. There is no risk of being stuck with a property that has many liabilities or a property that has no interested buyer.

While purchase options are a great choice, they are not goof-proof. Investors need to discover how to invest wisely, and that's where FreeRealEstateMentoring comes in. The site FreeRealEstateMentoring can show you what you must do ? and what you must avoid ? in order to become a real estate investing success story.