4th Avenue Property Management specializes in selling homes on a Lease Purchasing Program. We have used this program to sell all of our homes and many other owner’s homes as well. The following will hopefully answer most of the questions that you may have about Lease Purchasing.
What is a Lease Purchase?
A Lease Purchase is simply a lease agreement with a delayed purchase for the tenant-buyer to purchase the property. The tenant-buyer makes monthly payments and a portion of those payments are applied to the price of the house. The Lease Purchase allows you to have your mortgage paid by someone else.
What type of agreement will we sign with you?
We will execute an “Lease Purchase Agreement” between the two parties along with several other documents including a Direct Deposit Form for future payments. We will collect the first month’s lease payment which will go to the owner. Our fee is the tenant-buyer’s option deposit, which will be part of their down payment when they close on the home.
Who determines the asking price?
You do. You are offering the tenant-buyer a set price at some future date. Tenant-buyers are willing to pay market value for your house. You don’t have to haggle over the price with the tenant-buyer. They know the price and they know there is no negotiation. However, the tenant-buyers know the property values for the area and the number of houses for sell does create competition. As long as the house is priced accordingly, it will move.
What is your involvement in collecting the monthly payments?
We have no involvement in collecting or receiving any monthly payments. We simply setup the bank draft authorization and collect the first month’s lease payment at the time the lease is executed.
What is your marketing plan for my property?
With more than 9 years marketing homes, we have 5 avenues that produce qualified canidates. Our marketing plan involves professional marketing via more than 100 websites. Because of the volume of articles and blog post we circulate and the content on this sight, along with the search engine rankings, we are blessed with a high volume of traffic. Additionally, we will email blast your property description and details to our growing database of prospective tenant-buyers. We have far more tenant-buyers than we have homes.
Why do you believe you can find a better tenant-buyer that I could do on my own?
You have one house and are looking for one tenant-buyer. With a single property, you will most likely attract a career renter, which isn’t what you want. Your goal is to sell your house as quickly as possible at market value. Our tenant-buyers come to us because they are interested in our program. Many times buyers come to us before they ever see one of our homes. Our first contact is typically non-specific to a home. This value allows us to attract a better caliber of tenant-buyer. Also, our program and system is what produces the desired result. A closing!
How can you Lease Option my house so quickly?
Remember, we have been doing this for years. Of course, we can’t guarantee that the tenant-buyer will close on the home, but due to the large number of people we have in our database that want to lease purchase homes through us, we can often find tenant-buyers quickly. However, our ability to move your house is greatly determined by your asking price and monthly payment. As long as your house is priced accordingly and the monthly payments are in line, we have a very good track record.
Will they tear up my house?
The great thing about our tenant-buyer program is they are intent on owning the home. The tenant-buyers know that they are paying non-refundable money every month toward the purchase of the house. They don’t want to damage something that will be theirs. Very often the tenant-buyers make upgrades or renovations to the property. I have personally received upgrades and renovations to my own homes with new roofs, new HVAC units, updated and remodeled kitchens, decks, new baths, new windows, new floors, landscaping, exterior buildings, remodeled basements, and privacy fences. Most of the families that come to us have been paying quite a bit to lease nice homes in nice neighborhoods. The families are established in the neighborhoods and schools and tired of leasing and ready to lease purchase, but they just need a little time to qualify.
Why don’t they just wait to buy?
I get this question alot. In our market, we are experiencing a drastic drop in property values and deals are everywhere. If you are asking market value for your house, the price is still going to be lower than it was 3 years ago. With the lower prices and extremely low interest rates, now is a great time to buy. They can use the time to rebuild their credit and with our program they start receiving the benefits they would not receive by renting.
Am I going to be responsible for maintenance and repairs?
You will not if structured properly. In our program, the tenant-buyer is responsible for most minor maintenance and repairs. We always recommend a Home Warranty so that the repairs are covered. By providing a Home Warranty, you are assured that the work is done by a professional rather than a handyman or a homeowner. The only repairs you are responsible for are the major repairs such as structural and roof, which fall under your insurance as a homeowner.
Who receives the tax benefits?
You do. Until the financing is complete for the tenant-buyer, the house is considered an investment property for tax purposes. There are great tax advantages to lease purchasing, including the fact that a large part of the money you bring in is tax deferred. The best part is you receive all of the tax benefits without the landlording headaches.
How soon can the tenant-buyers obtain a mortgage?
Most of the tenant-buyers who come to us are already working with a mortgage broker or are currently in a credit repair program. There are just blemishes on their credit that need to be resolved or removed. Most are self-employed and some have gone through life experiences such as divorce. Once they come to us, we verify what is holding them back and work with their lender or put them in touch with our lender to resolve whatever the problem may be. However, most of our tenant-buyers can obtain a mortgage in 6-9 months.
What if the tenant-buyer decides not to buy?
This is highly unlikely, as the tenant-buyer has two major ties to the property. A financial tie, and an emotional tie. The financial tie comes from the fact that all of the money they have paid is non-refundable. This is normally thousands of dollars in most cases. The only way they will see that money again is if they close on the property. They would be better off to close on the property and then resell it themselves.
There are only three cases that we have come up with where someone may not purchase the property, and they are all pretty catastrophic situations.
- 1) Loss of or transfer of job
- 2) Death
- 3) Divorce
We have purposely put everything into place in our program to get the tenant-buyer to close on the property. From the non-refundable option fee payment, to the large rent credits, to immediately putting them in contact with a mortgage broker.
If for some reason they decided they couldn’t close on the property, the house is still yours and in your name. You may decide to use our services again, or you may decide to try to sell it on your own or go through a Realtor. The decision is yours. You are not contractually bound to us in any way. But we are here to help you in anyway that we can.