Lease Option Real Estate Investing: Advantages and Disadvantages

One creative way to get started investing in real estate is to use a lease option. The biggest advantage of using lease options to invest in real estate is control.

This method of investing, basically gives the investor the right to possess be in control of — and profit from a property without owning it.

A real estate lease option contract is a combination of two documents.

The lease part of the contract is where the owner agrees to let you lease their property, while you pay them rent for a stated period of time.

If you want to know more about the real estate investment visit http://www.yanrealty.com/. During the lease period, the owner cannot raise the rent, rent it to anyone else, or sell the property to anyone else.

The option part of the contract represents the right you purchased to buy the property in the future, for a specific price.

The option part of the contract obligates the seller to sell to you during the option period but it does not obligate you to buy. You are only obligated to make rental payments as agreed during the lease period.

When the lease option contract is written and structured properly, it can provide tremendous benefits and advantages to the investor.

If the lease option includes the “right to sub-lease”, the investor can generate a positive cash flow by renting the property to a tenant for the duration of his lease, or lease option the property to a tenant-buyer for positive cash flow and future profits.

If the lease option includes a “right of assignment” the investor could assign the contract to another buyer for a quick profit.

Lease option real estate investing, is a flexible, low risk, highly leveraged method of investing that can be implemented with little to no money.

High Leverage

It is highly leveraged because you are able to gain control of a property and profit from it now even though you don’t own it yet. The fact that you don’t own it, also limits your personal liability and personal responsibility.