No Money Down Lease Option For Buying Real Estate

Qualifying for a loan can be difficult for many people.  Some buyers do not make enough money and others may not have the credit rating or may have just gotten a new job.  A lease option may be a qualifying alternative and these deals are out there.

The lease option involves creating a sales agreement where the buyer gains control of the property but not the ownership.  The contract spells out a future date where the property transfers ownership.

Not all properties are up to code and able to qualify for a loan without major improvements.  The seller may own the home outright without encumbrances but realizes that the property needs an investment of both time and energy before a bank will offer a purchaser a loan. 

The lease option may fit the bill for these sellers and buyers.  The buyer can take control of the property and start the improvement process.  After a specified period of time (say 3 to 5 years) the purchaser must buy the property from the owner.  All along the purchaser has been making lease payments and depending on the contract could be applied to the purchase price.

The contract may call for a balloon payment at the end of the lease, but this may not be all so bad.  Hopefully the buyer has been working on the property and both the buyer and the home will qualify for the loan.  At that time the owner is able to cash out and the buyer has his house. 

It is recommended that the sales contract by drawn-up by a real estate attorney.  Both sides must understand the terms and the buyer must understand what the consequences are if he does not follow through on the balloon payment if the contract specifies one.

You may want to consider looking in the older neighborhoods for houses like this.  You may be surprised by what you find.  The homes may be situated on larger lots and some may even have a view. 

There are many reasons why a seller would want this sales option.  It is quite common for children to place their parents into assisted care homes when the parents can no longer take care of themselves.  The grown children may not have the time or resources to fix the house up.  The lease option deal may be the best option for both sides.