Lease Options versus Subject-To Deals


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Beginning real estate investors often wonder which is the better investment choice, a lease option or a subject-to. Every experienced real estate investor has his own preference. However, there are some differences that can make choosing one over the other a better situation.

Why prefer a subject-to?

Subject-to’s are preferred by many investors. The reason is their name is on the title. This means legally they own the property.  Messing or keeping up appearances with the previous owner is no longer necessary.

Why Lease options?

Lease options are great if you cannot buy the property right away, or the seller isn’t willing to let go completely of their home. You make monthly payments to the seller until t you buy them out or pay them off. However, this leaves some major problems to consider. Your name isn’t on the dead yet. Technically, you do not own the property. This situation leave you open to a lot of unknown consequences.

Limiting Your Risk

With any real estate transaction, you should do your research to make sure you are not going to end up on the losing end. Especially with seller financed properties, run a credit check on the seller. If they are in financial trouble, there is a great chance that you may end up without a home.

Run a title search on the property to make sure the title is clear. This verifies there are no unknown liens on the property. As a bonus, you can also verify the mortgage balance and monthly payment on the property.

Make sure that you are paying the mortgage every month. Either set up a trust that pays the financial institutions the mortgage payment, or pay the mortgage company directly. This allows you to cover your hiney.

If problems arise with any of these situations that are a good sign you don’t want the property. The seller is either no really interested in selling, or they are too risky to work with. No matter what, be prepared to walk away from the sale.

For more information on real estate investing, call or visit us at Homevestorsfranchise.com. We are the nation’s number one home buying franchise with over 15 years experience buying and selling properties. We have an extensive selection of real estate investment properties as well as real estate franchise opportunities that will help you grow your real estate business. Come see what opportunities we have available for you today!

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