I just got another article published on Ezine that delves into the advantages of lease purchasing to the owner/landlord. It is a detailed article on all the benefits that an owner has in a lease purchase deal. Take a look at the article at the following link: http://ezinearticles.com/?The-Owner-Landlord-Advantages-of-Lease-Purchasing&id=2523216. Enjoy and contact me at sam@rtoanswers.com if you have any questions.

Sam Giuliano

www.rtoanswers.com

I often ask prospective landlord clients any number of the following questions:

• How would you like to have tenants in your property that are MOTIVATED to pay you rent on time every month?
• How would you like a quick turnover on your vacant property?
• How would you like it if your tenants were responsible for taking care of all minor maintenance issues for the property?
• How would you like to get at, or above, market rent for your property?
• How would you like to receive a lump sum payment of non-refundable option consideration money from your prospective tenant/buyer?
• How would you like to sell your property for market value without onerous real estate fees?
• How would you like to maintain all the legal tax shelters that a landlord is entitled to without having all the difficult and painstaking landlord responsibilities?

Usually I have an interested prospect by the time the first question is asked. However, as one can see there are a number of additional benefits afforded an owner/landlord in a lease purchase deal. This definitely is a WINNING solution for any owner/landlord prospect. For further information regarding the owner landlord advantages please contact sam@rtoanswers.com or visit www.rtoanswers.com.

 1) The Sandwich: Hold the mayo? Not exactly! This is where you rent with one contract and then sublet to your tenant buyer with two new contracts at a higher sales price. You receive option consideration up front which can be 2 1/2% to 10% of the sales price, positive monthly cash flow, cash at the close from the remaining spread and possible renewal option consideration and notes.

2) The Full Price Assignment: You find it, negotiate it, embody it in a good lease purchase contract and then sell it to the lovely couple who want to live in it. You can make money without being adversarial, give the seller the full price they want and provide a positive solution for folks who want to buy, but who lack your specialized knowledge. Your potential profit, the assignment fee can be up to 10% depending on market demand and flexibility. Excellent notes and cash flow can be derived from this technique.

3) The Wholesale Lease Purchase Assignment: Similar to #2 above, but with one distinction; you sell the contract at a lower assignment fee to another investor. (Believe me, with all the seminars, bus rides and boot camps out there you will have no problem finding these folks). The profit is smaller, but the turnover is fast especially if you have a data base of ready buyer/investors.

4) The Pure Option: This is the way to control a property without the need for a lease. Basically you lock in a price for a potential future purchase. You can hold on to it for appreciation or just sell the contract to another investor. Tip: For certain sellers you will have to incorporate a “first right of refusal” clause in your contract in order to make the deal happen. This passage gives the seller (optionor) a right to call in the option with a pre negotiated time notice. Example: You have 30 days to buy the property or give me back my option.

5) The Hybrid: Set up a Lease Purchase as in #1 and pocket the option consideration, sell the contract with your Tenant/Buyer to another investor who wishes to reap the profitable benefits.

6) The Sublet: Perhaps you want to keep the option open to buy a home for you and your family. The solution is to just rent it out and let someone else make the payments. Negotiate a long lease with a favorable monthly rent. Tip: Look for homes where the mortgage is paid down and the principle payments are lower.

7) The “Subject To” Option: How many times have you been faced with a good deal, but you were concerned about being stuck with the monthly payments? Well, just by incorporating the special “subject to” passages in your contract you can have assurance that you won’t have to make a payment until you have found an assignee or tenant/buyer who can make the payments so you don’t have to.

 8) The Cooperative Assignment: This is a strategy that we developed for the reluctant seller who wants to have a say on who you assign or sublet the property to. The advantage of doing this kind of deal is that you have no obligation to make monthly payments to the owner. It is essential that both you and the seller have a clear understanding as to what kind of tenant/buyer/assignee you are looking for so no time is wasted.

9) The Products: (advanced strategy) In many cases the person you are trying to do business with will need more information and something tangible about renting-to-own; why not provide a solution and a profit for yourself? We sell the world’s best selling cassette tape set on the subject of Lease Purchasing (and many other products) because the market demanded it; why aren’t you? This provides a wonderful stream of income. All you have to do is develop your own product or you can save time and several hundred hours of work by using our quality line of products with my NEW Mentor Licensee Program and become an authorized distributor.

10) The Consultation: (advanced strategy) This is a unique strategy that the Diamond Consulting Group developed because the demand was there. We found that many folks who were selling, buying, etc. were in need of a positive solution, but did not necessarily want an outside unknown investor as a principle in the deal. What they did want were good contracts, knowledge and support. We also found that many investors needed a way to get paid for their time, knowledge and energy. The Creative Real Estate Consultant was born. Imagine getting paid for all those experiences you had both good and bad. We developed a complete business plan for this high profit and low overhead professional business opportunity. All you need is knowledge, a phone, the GUTS™ Sales System and in 30 days you are rocking!

11) The Portfolio: (advanced strategy) This is a solid conservative long term strategy for wealth accumulation. Use all of the above strategies (1-10) to accumulate enough cash (usually 10-20% down payment) to purchase good homes and condos in upscale middle class neighborhoods. You need to have a pre approved mortgage/line of credit so you can work fast to buy properties 20% or more under market. Take the home and Lease Purchase it with generous rent credit in one year contracts. If they buy, renew or move out you win.

Now that you have seen the benefits how can you afford not to be in Lease Purchasing. Give me a shout at RTO Home Solutions (647) 287-4500 or rtohomesolutions@rogers.com for more information on this niche real estate idea that will change your life for the better.

Best Regards,

Sam Giuliano BA, PMP

Rent to Own is Smarter than Buying!

(Using RTO Home Solutions Rent Credit Programs)

I recently had a conversation with a friend regarding RTO Home Solutions rent credit program and it occurred to me that RTO Home Solutions 100% rent credit program is the most advantageous means of purchasing a home for any home buyer. It really is better than buying and getting a mortgage right away!

How can I possibly make such a bold and powerful statement? How can this possibly be true?

Well if you look at the numbers, and we will in this article, RTO Home Solutions 100% rent credit program will save a tenant/buyer thousands of dollars in the first year of the lease option, compared to a traditional mortgage. If this amazing program sounds interesting, call me any time of day or night at (647) 287-4500 or email me at rtohomesolutions@rogers.com.

Let’s continue looking at the numbers:

In the “traditional” purchase of a home, the homebuyer will, more often than not, get a conventional mortgage from a bank or some other lending institution. The table below is the payment schedule for the first year of a $300,000 mortgage, amortized over 25 years, at a (historically low) 4% interest rate. The monthly mortgage payment is $1578.06.

Table #1  Mortgage payment in the first year of ownership on a $300,000 mortgage

Before we begin with the analysis of the numbers above, a note must be added regarding the down payment that is usually required to purchase a home and attain a conventional mortgage. In Canada, a buyer requires a minimum down payment of 20% and a solid credit rating to get an uninsured mortgage. This insurance fee can add thousands of dollars to the mortgage on the property. Therefore, a down payment of approximately $75,000 is required to get a mortgage of $300,000 (20% Down payment) without this added insurance. That is an excessive amount of money to put down for the privilege of getting into a home.

The above table demonstrates that in the first year of a mortgage a home owner actually makes a total of $18,936.72 in mortgage payments. However, only $7,164.87 actually goes towards paying off the balance or the principal of the mortgage. That’s right, only 38% of your annual payments go toward the principal in the first year. That means 62% of your payments go towards the interest on the mortgage and are not serving you or your finances well. All this does is make the banks solvent and you less so!

Lest we forget that there are other payments/expenses like the closing costs, property taxes, and property insurance that are required when you buy a house. These expenses will also run you into the thousands of dollars and do not go towards the purchase price of the home. Therefore, at the end of year 1, a person will make over $20,000 in payments to buy and carry a home and a meagre $7,164.87 goes towards the $300,000 owing.                                                                   

Table #2 First Year Expenses as a home buyer using the example above

(Example listed below is for illustrative purposes only)

Mortgage Payments                                                             $18,936.72

Estimated Property Taxes (annual):                             $2,500.00

Closing Costs:                                                                          $1,000.00

Property Insurance (annual):                                           $500

Total Payments:                                                                       $22,936.72

Total Remaining on the mortgage after one year:      $292,835.13

A total of 31% of all payments made in this example went to the principal amount owed on the house. It is no wonder so many people today rent homes as opposed to buying.

The dirty little open secret of traditional renting is that the landlord does not pay for any PITI (Principal, Interest, Taxes, and Insurance) on the property. Rather it is the tenant that pays all these costs for the landlord through his/her rent. It is no different in a rent to own agreement in which the tenant/buyer must pay rent on a monthly basis and this rent will cover all the PITI costs of the landlord. The BIG difference is that in a lease purchase deal with RTO Home Solutions these payments may be credited up to 100% towards the purchase price of the home[1]. That’s right, all those payments described above actually go towards the purchase price of the home. It is actually beneficial for a tenant buyer to pay a higher than market rent because all, or a substantial percentage, of that money may be credited towards the purchase price of the home. The owner of the house does not even have this advantage. It really is a winning scenario for the tenant/buyer.

In addition to the great advantages listed above, another fabulous feature of RTO Home Solutions programs is that the non-refundable option consideration money[2] required (usually 2.5% to 10% of the purchase price of the house) is considerably less than a down payment on a traditional mortgage and may be credited up to 100% towards the purchase of the home. That’s right! No mortgage, government insured fees, mortgage fees, etc during the lease option period. The only extra requirement is that the tenant/buyer gets renters insurance for their own protection.

Table 3: Comparison between Lease Purchasing and Mortgage payments for the first year                 

 (Example listed below is for illustrative purposes only)

After a one year lease term with RTO Home Solutions the tenant buyer actually pays down the purchase price of the home faster than a buyer of a home with a mortgage. As table 3 demonstrates, the tenant buyer actually spends less money in the first year but puts more money towards the purchase price of the home.  Upon completion of the lease option period it is the responsibility of the tenant/buyer to secure financing or a mortgage for the total remaining (in this example $279,200), from a bank or other lending institution, to complete the sale of the home.

Lease Option rent credit programs are actually set up to give tenant buyers of all credit worthiness the opportunity to own their home quicker. Many people often think that tenant/buyers in lease purchase deals all have bad credit and cannot get conventional mortgages. This is not necessarily true. Especially with the 100% rent credit program, lease purchasing is for smart future home owners that wish to save money and pay down the purchase price at an accelerated rate before buying the home and getting a mortgage from a bank or mortgage broker.

RTO Home Solutions also offers other generous rent credit options for prospective buyers with credit issues or a smaller amount of lease option money. Lease Purchasing with RTO Home Solutions is actually the smart move for all prospective tenant/buyers that aspire to being home owners one day.

It must be noted that RTO Home Solutions does not give or guarantee mortgages. RTO Home Solutions is not a bank or mortgage lender. The RTO Home Solutions Lease purchase program simply credits the rent money paid to the purchase price of the house. This piece of writing is not meant to infer, in any way, that RTO Home Solutions gives mortgages or warrants a mortgage at the end of the lease term. It is the responsibility of the tenant/buyer to attain a mortgage, if required, from a lender to purchase the home at the end of the lease option period.

Sam Giuliano is a lease purchase specialist with RTO Home Solutions in Ontario, Canada. RTO Home Solutions is a North American company that makes lease purchase deals across Canada and the USA. If you require further information on lease purchasing deals with RTO Home Solutions or wish to take advantage of a fantastic opportunity please contact Sam at (647) 287-4500 or at rtohomesolutions@rogers.com. In addition, please visit http://rtoanswers.com/.

[2] Option Consideration is a non-refundable sum of money a tenant buyer puts down to gain the option of purchasing the home at the end of the lease option period. This option consideration money is usually credited towards the purchase process of the home.