Benefits And Disadvantages Of Lease Option Real Estate Investing

Lease option real estate investing is a creative way to get started in real estate investing. The biggest advantage of the investing approach is “control”. It basically provides the investor the right to possess– be in control of– and profit from a property without owning it.

A lease option contract is a mixture of two records. The lease part is where the owner consents to allow you to let their property while you pay them rent for a stated time. During the lease period the owner can not increase the rent, let it to anyone else, or sell the property to anyone else.

The option part represents the right you bought to buy the property later on for a special price. The option part of the contract obligates the seller to sell to you personally during the option period- but it doesn’t obligate you to buy. You’re only obligated to create rental payments as agreed during the lease interval.

When the lease option contract is written and structured correctly, it can offer enormous benefits and advantages to the investor. In the event the lease option includes the “right to sub lease” the investor can yield a positive income by renting the property to a tenant for the length of his lease, or lease option the property to a tenant-buyer for favorable income and future profits. In the event the lease option includes a “right of assignment” the investor could assign the contract to some other buyer for a quick profit.

Lease option real estate investing, is a versatile, low risk, highly leveraged method of investing that may be executed with little to no cash.

High Leverage

It is highly leveraged because you’re able to obtain control of a property and profit from it now–even though you do not possess it yet. The undeniable fact that you simply do not possess it also restricts your private responsibility and liability.

Little to no cash

The investor’s cost to implement a lease option agreement together with the owner needs little to no cash out of pocket cash because it is completely negotiable between investor and owner. There are a number of manners the option fee could be structured such as an installment plan, balloon payment or other agreeable arrangement between both parties. The option fee can even be as little as $1.00. To be able to secure the property for purchase at a later date, tenant-buyers generally pay a non-refundable option fee of approximately 2%-5% of the negotiated purchase to the seller.


It’s a versatile approach of real estate investing because terms of the agreement like payment amounts, payment dates, installments, rate of interest, interest only payment, balloon payments, purchase price and other terms are all negotiated between seller and buyer. Responsibilities of both parties are also negotiable. For instance, in the event the investor doesn’t need to act in the capacity of a landlord, he could specify in the lease option agreement that tenant-buyer will be responsible for all minor maintenance and repairs and the first seller will remain responsible for any major repairs.

Fiscally Low Danger

It’s low risk financially. In the event the property fails to go up enough in worth to produce a profit, you have the bought the right to modify your mind and let the “option to buy” expire. Even if your tenant-buyer decides not to buy the property, you have benefited by a positive monthly income from the tenant-buyer’s rent payments and upfront non-refundable option fee.

Let’s look at an instance of a lease with option to buy structured in a sense in which the investor profits in 3 different stages of the investment.

Gain #1 non-refundable option fee

Future sales price negotiated with the present owner is $125,000 with an option fee of 2% of the sales price. The future sales price you set for your tenant-buyer is $155,000 and the option fee is 4% of the sales price. Option fee the tenant-buyer owes you is $6,200. You collect $6,200 from tenant-buyer and pay $2,500 to the owner and your profit = $3,700

Gain #2 cash flow from monthly rental payments

The Monthly rental payment you negotiated with the owner is $1,000. You set the payment at $1,250 per month for your tenant-buyer. Each month you collect $1,250 from your tenant-buyer and pay the owner $1,000 each month. Your profit is $250 monthly positive income during the lease interval.

The difference in the negotiated future purchase price together with the owner as well as the future purchase price set for your tenant-buyer. Your tenant-buyer decides to exercise their option to buy. You buy the property from the owner at $125,000 and then sell it to your tenant-buyer for $155,000. $155,000 – the $125,000 you pay to the owner = $30,000 profit.

Finding these motivated sellers and buyers should not be difficult. The continuing down turn in the real estate market has created a great number of sellers who can not sell their property and also buyers who can not get funding to buy. The seller could possibly get a fair offer to be paid later on by selling their property to a real estate investor on a lease option basis. A potential tenant-buyer could get home ownership without needing to qualify through traditional home loan guidelines.

One disadvantage of lease option real estate investing involves the tenant or tenant-buyer maybe defaulting on monthly rental payments. This would allow it to be crucial for the investor to come up with cash out of pocket to settle the owner and possibly must continue with eviction process. Yet, there are particular provisions and clauses which can be written into the lease option to discourage buyers from defaulting on payments.

In case the investor fails to do “due diligence” before entering into a lease option agreement, he could end up with a property that is unmarketable. There could possibly be numerous liens on it, dilemmas involving possession of the property or it may be in foreclosure. By diligently performing research before entering into a lease option agreement, the investor can avoid these errors.

Despite the few disadvantages, lease option real estate investing continues to be a great method to put money into real estate with little to no cash and low financial risks. Additionally, it remains to be a great strategy to obtain control of a property you do not possess and create favorable cash flow and profits on flexible terms.

The point is, the secret to success in today’s challenging real estate investing market is really to use simply the finest creative ideas, proven tools and strategies which have been successfully used by other investors to generate income and profit from today’s housing market. The further you comprehend and apply now, the further you will benefit from today’s financial catastrophe.

Student Loans in Canada – Their Features

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Student Loans in Canada & Their Characteristics

The majority of the nations on the planet now supply facilities for pursuing higher education and offer numerous kinds of loans and grants. Particularly the pupil’s loan program and grants plan both help the pupils with financial assistance for pursuing their education and building up their profession.

Forms of Student Loans in Canada

-In case of grants the pupils don’t need to repay the amount sanctioned in their own favor;

– Loans are sums which are sanctioned but need to be paid back in future; and

Why Student Loans in Canada is Significant

Reasons for value of the student loans in Canada is that few pupils become eligible for grants which are non refundable. Thus, many others that aren’t eligible for the grants choose the student loans in Canada. Pursuing higher secondary education opens up numerous paths for building up profession in the nation.

Primary Resources for Canada Student Loans

– Canada Student Grants System;

– Canada Students Loans Plan;

-Repayment Help web site; and

– All the associated links.

Furthermore, the aspirant borrower can go to the official web site of higher education section of Government of Canada to find out more on student loans.

Student loans in Canada is offered to both full time in addition to the part time students pursuing post-secondary classes and need financial assistance for the same. Such facilities are accessible in the majority of part of the state.

– CSLP or the Canada Student Loans Program which works in collaboration between Government of Canada along with the state governments;

– Generally it’s a partnership between state and federal government;

– Provincial and territorial loans make up 40% of such loan extended to pupils.

A Short Review of Student Loans in Canada

Such expenses were incurred in kind of part time and full time student loans for about 350,000 pupils. Besides such loans, the Canadian Government has also supplied tremendous number of grants of around $142 million that’s nonrefundable to pupils.

Nevertheless, coverage of student financial assistance is a lot greater in kind of student loans in Canada.

Debt Settlement What Percentage of a Debt is Typically Accepted in a Settlement

I am frequently asked by subscribers, “What percent of a debt is usually taken by lenders in if I do debt settlement?”

It is an excellent question, plus it is crucial that you establish the correct expectation when contemplating debt settlement. Most of the fly by night firms that have started up in recent years who don’t have any actual track record settling big quantities of credit card debt frequently dupe consumers into registering in their unethical plans by offering unrealistic guarantees that are never fulfilled. Stay away from startups full of huge guarantees because the “too good to be true” plans they offer will wind up costing you a lot more than you ever anticipated to pay in the event that you register with them.

Below I Will list the real typical resolutions the business top debt settlement firms are finding for credit card debt other forms of debt that could be contained in debt settlement plans. Be careful for ANY guarantees made by new firms (less than five years old) based on approximations lower than these. Such “newbies” are scarcely ever even capable to mach these business top amounts and generally settle for considerably more. First, I would like to provide several important keys about your scenario that may discover what you could expect to settle for:

1) “Who” your lender is.

Who your lenders are makes a tremendous difference in the sum of the typical resolution and that which you ought to anticipate. Specific lenders are competitive and you’ll straightforward need to pay more than you’d with other lenders. These “competitive” lenders shift over time, as well as act differently depending in your state of residence.

Your payment history is an essential element of your credit. Should you be present on your own debt, then you’ve almost NO opportunity for settling for significantly less in relation to the complete balance. In case you would like to settle your debts for under that which you owe, you got to be behind on the debt. Being present on substantial unsecured debt “sabotages” the dialogue procedure for delinquent debts you’re trying to settle.

In the event that you’re behind on a debt you’re trying to settle, but you’re present on other major unsecured debt (with balances of $500 ), then the lender you’re behind on and negotiating a resolution with may find you’re present, paying 100% of what you owe PLUS interest to some other lender and certainly will be reluctant to settle for a low sum or potential in any way. Therefore, you ought to be behind on ALL unsecured debt to be able to successfully settle your accounts for the low sums I’m going to record.

Exceptions: You may stay present on specific varieties of unsecured debts without hurting your discussions. The exceptions include Federal Credit Unions and military reports. While great resolutions could be made after only 30-90 days past due, we generally receive the best resolutions AFTER an account is “charged off”, typically after 180 days late, and particularly when it is subsequently sold to a third party debt collector.

This devalues the account, as well as the lender starts to “get in the mood to settle”. Once this occurs, for those who own a lump sum in the amount listed below, you can probably settle. Frequently, lenders sell the account to a third party debt collector after it’s been charged off and lost worth. The typical sum paid for “bad debt” in 2006 was $0.034. That is 3.4 cents on the dollar suits are always a danger when trying debt settlement.

Within one year of the statute of limitations (3-10 years, depending in your state) suits are uncommon, occurring in just 2-5% of accounts. Over half of these cases are settled BEFORE going to court because customers have resources accessible to settle. AFTER a summons is received and BEFORE the court date (typically a 30 day window) is a chance to settle since the lender will often desire to settle and prevent the further cost and dangers entailed in suing you. You may frequently get a lot better than typical resolutions ahead of a litigation’s. Therefore, legal action might be considered a resolution chance in case you have resources accessible to settle.

When you offer the sums recorded below… it is a smokin’ deal to the lender or collector. Now with these essential variables in your mind, take a gander at what professional negotiators at top debt settlement firms are viewing:

* Find Accounts 65%
* Flat Rental Re-letting Fees 40%
* Rulings/Garnishments, Repossessions 80%
* Group Balance Greater than $750 Resolutions 40%
* Set Balances Under $750 Resolutions closer to 85%
* Debts under $750 80%* These are “typical” results, really somewhat “padded”. The very best negotiators have even better percents typically, but these amounts signify professionals as a whole. ** The conditions of your financial adversity may play an immense part in discussions.

These amounts are additionally for professional negotiators representing many customers who might have millions of dollars in debt owed to a lender in discussions simultaneously.

You shouldn’t anticipate these amounts by yourself, but a lot of my subscribers have reported considerably better (non-typical) percents, as low as 10% with major lenders.