Advantages And Disadvantages Of Lease Option Real Estate Investing

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

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

The option part represents the right you purchased to buy the property in the future for a specific price. If you decide to exercise your option to buy, the owner has to sell it to you at the negotiated 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 responsibility and liability. Only if you decide to purchase the property by exercising your “option to buy” would you take title to the property.

Little to no money

The investor’s cost to implement a lease option agreement with the owner requires little to no money out of pocket money because it is entirely negotiable between investor and owner. There are a variety of ways the option fee can 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. In order to secure the property for purchase at a later date, tenant-buyers typically pay a non-refundable option fee of approximately 2%-5% of the negotiated purchase to the seller. Depending on how the lease option agreement is written and structured, the investor could possibly use the tenant-buyer’s option fee money to pay any option fee owed to the owner.

Flexible

It is a flexible method of real estate investing because terms of the agreement like payment amounts, payment dates, installments, interest rate, 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, if the investor doesn’t want 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 original seller will remain responsible for any major repairs.

Financially Low Risk

It is low risk financially. If the property fails to go up enough in value to make a profit, you have the purchased the right to change your mind and let the “option to buy” expire. Even if your tenant-buyer decides not to buy the property, you have profited by a positive monthly cash flow from the tenant-buyer’s rent payments and upfront non-refundable option fee.

Let’s look at an example of a lease with option to buy structured in a way that the investor profits in 3 separate phases of the investment.

Profit #1 non-refundable option fee

Future sales price negotiated with the current owner is $125,000 with an option fee of 2% of the sales price. Option Fee you owe the owner is $2,500. 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

Profit #2 cash flow from monthly rental payments

The Monthly rental payment you negotiated with the owner is $1,000. You set the monthly 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 cash flow during the lease period.

Profit #3 is set up when the lease option contract is initially written

The difference in the negotiated future purchase price with the owner and the future purchase price set for your tenant-buyer. Let’s say the property goes up in value to appraise for at least $155,000. 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.

Of course the key to making lease option real estate investing work, is finding motivated sellers and buyers. Finding these motivated sellers and buyers shouldn’t be difficult. The continuing down turn in the real estate market has created a large number of sellers who can’t sell their property and also buyers who can’t get financing to buy. The seller could possibly get a fair offer to be paid in the future by selling their property to a real estate investor on a lease option basis. A potential tenant-buyer could obtain home ownership without having to qualify through traditional home loan guidelines.

One disadvantage of lease option real estate investing involves the tenant or tenant-buyer possibly defaulting on monthly rental payments. This would make it necessary for the investor to come up with money out of pocket to pay the owner and possibly have to proceed with eviction process. However, there are certain provisions and clauses that can be written into the lease option to deter buyers from defaulting on payments.

If 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 be a number of liens on it, issues involving ownership of the property or it might be in foreclosure. By diligently performing research before entering into a lease option agreement, the investor can avoid these mistakes. A few things the investor could do is– perform background and credit checks on both the seller and buyer, search public records in reference to ownership and property status, or do a title search.

Despite the few disadvantages, lease option real estate investing continues to be an excellent way to invest in real estate with little to no money and low financial risks. It also remains to be an excellent way to gain control of a property you don’t own and create positive cash flow and profits on flexible terms.

Bottom line, the secret to success in today’s challenging real estate investing market is to use only the best creative ideas, proven tools and strategies that have been successfully used by other investors to generate cash flow and profit from today’s real estate market. The more you understand and apply now, the more you will profit from today’s financial crisis.

Knoxville Reia – Real Estate Investors Association

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Across the country big cities are sprouting up their own real estate investors association. Knoxville, Tennessee is no different. Entrepreneurs in East TN have several options for real estate investing education. They can get information from books on the subject, become an apprentice of a seasoned investor or study a course on the topic. The Knoxville Real Estate Investors Association (REIA) is the easiest place to start. It’s like the previous three (book reading, apprenticeship and a course study) ALL ROLLED INTO ONE PLACE. Members learn to use the power of leverage by concentrating their efforts on mentoring, networking and education.

At the Knoxville area REIA (Investors Club Meeting) members discuss topics such as foreclosures, REO’s (bank owned) properties, short sales, wholesale deals, flips, rehab and rentals. Members learn what they all mean and how to use them in their business.

Mentoring –

Club members can become an apprentice to a seasoned investor at the REIA. The mentor can help them decide what is the best strategy for accomplishing their investing goals. A good mentor can shorten the learning curve and greatly accelerate the road to success.

Networking –

Successful property investors at are actively building their business. They are the one’s who are doing deals and making money by investing, because they have a large network of business contacts. REIA members understand the importance of networking and building relationships in the property investing business.

Education –

It doesn’t matter if the members of the REIA are veteran investors or if today is their first day learning how to invest. Real Estate Education is a life long process and it goes without saying that active investors should never stop learning. The Knoxville REIA brings together the best in investing information available in TN to help it’s members earn more in real estate. Their goal is to bring it’s group of investors the most up-to-date education.

Past Speakers –

In the past the Knoxville REIA has been hosted by real estate guru’s such as Lou Brown, and Than Merrill of A&E’s “Flip This House” (just to name a few).

The Knoxville REIA offers education from seasoned investors that are there to speak about their particular area of investing expertise. This is how members learn from their mistakes. It saves them both time and money. Find out how to take the next step. Current meetings are held in west Knoxville on the third Tuesday of every month (subject to change).

In Montana Real Estate Under $200k Buys Ski Resort Property

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So, do you style yourself as an active outdoor person, then Montana real estate might be just what the doctor ordered? As a retirement location there is just so much to do and to see that it would take a lifetime of exploring to accomplish but a small portion of everything that is possible.

You’ll find that the Spires at Red Lodge offers all of the benefits associated with the Big Sky Country. Here’s the kicker: Red Lodge real estate is the lowest priced real estate in the
entire Rocky Mountain range for a town that contains both a ski resort and an 18 hole golf course.

To the south of town Montana’s highest peaks act as an undeveloped buffer zone to Yellowstone Park and the western lore runs deep dating back to the late 1800’s. The area offers enormous recreation and convenience as it is under one hour to a city of over 100,000.

The town boasts a new high school, new micro-brewery, and construction begins this spring on a new $25 million hospital and assisted living complex. New services, new retail stores, and signifcant upgrades to Red Lodge Mountain under new owners have got the whole town buzzing.

This rejuvenation of infrastructure is getting the attention of second homebuyers from all over the nation. Click here if you’d like to visit the best that the area has to offer!

Only an hour away, Montana’s largest city offers tremendous shopping, the region’s top hospitals, and the best flight schedules. The convenience of living in an uncrowded recreational area and having superior access to amenities cannot be understated.

The Spires has created a walking-friendly neighborhood with lots of open spaces. It is the only development in the City featuring handicap ramps on every street corner for complete wheelchair accessibility and the Meadows Park even has a spring creek with brook trout in it.

The visual element of the Spires is completely stunning with hundred mile views and the Beartooth mountains for 180 degrees. In fact, the
total mountain view shed is 180 degrees, from the Crazy Mountains 80 miles away to the northwest, the entire Beartooth Wilderness frontage and down to Mount Maurice south of Red Lodge. Somehow it is difficult to associate these spectacular views with living inside the city limits, but you are.

Beginning in May of ’09 cottages with one car garages attached will be constructed with the price tag being under $200,000 USD. The cottages were built to keep energy bills down and time spent on maintenance related activities to a minimum so you can go enjoy the world-class recreation that surrounds you. To check out the best value in Montana real estate just Click Here!

In the post-excess consumption era this innovative development has taken a conservation and minimalist approach. These methods have led recognition for sustainable living.Red Lodge, Montana also has more restaurants and bars per capita than any other community in the
State of Montana, so there is always a diversity of places to socialize.

You can get lost in the mountains, the scenery, the town, or the long list of activities as there is always something going on..

Get in on the ground floor and check out the Spires, a new rising star in resort living.

Future of Medical Transcription in India

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In a country like India, where every second person aspires to be either an engineer or a doctor, it is no surprise that Medical Transcription is fast becoming one of the most sought after jobs in the BPO sector. A multibillion-dollar industry in America, Medical Transcription companies are now looking to India to outsource their services. Medical Transcription India is growing at an exponential rate.

What exactly is Medical Transcription? It is the process of converting a consultation with a doctor into a text format. When we visit a doctor we usually spend the first few minutes discussing our symptoms and problems. This is followed by questions about our medical history, an examination, and a prescription for tests or a secondary consultation if required. After the doctor has collected all the information he needs, he prescribes medication along with instructions for its use. After this, the doctor records the entire visit on voice recording machine, which is then converted into a word document by a medical transcriptionist and stored.

Major hospitals are now adopting this process in order to keep up with the changing times and provide their patients with the best health care available. However, the exercise of converting a voice file into text format is tedious and requires high level of expertise. A medical transcriptionist requires having in depth knowledge of advanced medical terms and language and having a minimum amount of experience in transcribing the likes of discharge summaries, health exams, etc. They must possess higher than average typing skills and should be affluent in the language in which the transcripts are being recorded.

These days’ hospitals are looking to outsource the job of Medical transcriptionists for a number of reasons. Most hospitals find it cost effective to outsource the job to companies in and outside their country. Outsourcing ensures better accessibility, superior quality and leverages on the industry’s experience. It reduces the capital investment for them and allows them use their resources to focus on their core competencies. India is fast becoming the go-to place for medical transcription.

India has abundant cheap labor possessing the skills to become a medical transcriptionist. The average salary of a medical transcriptionist in U.S.A. is around $33,000 p.a. whereas in India the average salary is Rs. 360,000, which is approximately $8,000 p.a. As a result, they are able to cut major costs while ensuring quality. Further, due to the time zone advantage companies here are able to send reports back overnight, making it the fastest turnover rate in the industry. The U.S. suffers from high attrition rates, and so outsourcing is the perfect solution to ensure high employee turnover doesn’t affect the hospitals. Seasonal fluctuations often result in an increase in number of patients during the winters occur in cold countries. There is an acute lack of available staff during major holidays like Christmas and Thanksgiving. Outsourcing the job to India easily solves these problems.

Medical Transcription requires the skill and intellect of human beings and so has inherent defects. If the transcriptionist were to record a symptom or diagnosis incorrectly it could harm the patient’s wellbeing. Sometimes the recording might not be clear as doctors are in rush and may fail to include vital information or provide information in a coherent manner. Further accents, mispronunciations and slag’s make it difficult for a transcriptionist from another country to fully comprehend what the doctor is saying. Such obstacles are yet to be over come in this field in India and world over.

With the help of the IT sector doctors are now able to convert cabinets full of patient data into word documents properly archived on a single desktop. These word documents can be printed out as and when required. Medical Transcriptions help hospitals maintain patient records for up to years and store them in a systematic and easily accessible environment and format. Medical Transcription in India is booming and as a result has opened up jobs to millions of people wanting to be part of the medical field. Many universities are now offering specialized courses and on the job training for young students to help them enter and successfully grow in this industry. India possesses all the advantages and skill to become one of the best providers of this service in the world. By ironing out a few irregularities India can soon look to become the premier play of this industry.

The Real Estate Market Of Rohini

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After a lot of research Jyoti, 32, and Ramesh Aggarwal, 36, have decided to purchase a two-bedroom, 1,000 sq ft apartment in a society complex in Sector 9, Rohini for Rs 38 lakh. Not only did they compare prices in their research, they also looked at factors that affect general day-to-day living, such as level of congestion, availability of greenery and open spaces, likelihood of water shortages during summers, and travel time to important destinations. Finally, took a decision and bought an apartment in Rohini.

There are many reasons why one would like to purchase a home in Rohini. And one of the main reasons why anyone would feel attracted to purchase a property in Rohini is because of its connectivity with the metro.

After the Metro became operational, prices have risen by 40-60%, according to a property broker of the area.

A property dealer based in Netaji Subhash Place explains the price rise in terms of reduced travel time. He said that till a few years ago, it took one-and-a-half hours to travel from Rohini to central Delhi areas like CP and ITO, so its property was available at a low price. After the coming of metro, the travel time is now only 40-45 minutes, and the commute being far more comfortable than a road journey, Rohinis society apartments now boat of a price of Rs 3,150-4,500 per sq ft. This is at par with prices in areas like Patparganj in East Delhi which are only a 30-minute drive from CP.

Not only metro, of late Rohini has witnessed a lot of commercial development as well, which has led to overall development of north-west Delhi. In fact, entertainment-wise Rohini has given newer options to people residing in the nearby areas.

There are some common factors that have contributed to an increase in prices in Rohini like easy availability of bank loans, high salaries commanded by young professionals, and the massive influx every year of people from other states into Delhi.

Rohini has options for every pocket: If you think you can afford one, go for a society apartment. These kinds of apartment boast of better-quality construction, high-maintenance, comparatively more open areas compared to DDA flats, and of course better security arrangements. The up-market complexes, about a dozen within Rohini, are equipped with lifts and have power backup system.

Such society apartments are mainly located in sectors 7-14 and out of these, sectors 9, 13, 14 and Prashant Vihar are available at a very high price, because of the quality of development and due to proximity to Metro stations (East and West).

Other option is DDA apartments that usually cost less than society apartments. 1 BHK LIG apartment costs around Rs 2,000 per sq ft, and prices of two-bedroom MIG apartments range between Rs 2,350 and Rs 2,900 per sq ft. The construction quality of a DDA apartment is usually inferior as compared to a society apartment, so you may have to spend some amount before you can actually start living in one. DDA flats are located in sectors 2-8, 15-18, and 24.

For people who are looking at low-budget options, they are available in sectors 23, 24, 25 and 28. These sectors are a little far from the Metro line. According to Mr. K.K. Wadhwa of Wadhwa Property, a plot of 32 sq m would cost around Rs 18 lakh in Sector 7; in Sector 28, the same plot-size would cost you just Rs 9-11 lakh in this sector.

A development that is sure to attract people from all over west Delhi to Rohini is Planet Pogo, a theme park, which is being developed in Sector 10. The company that developed Appu Ghar, Unitech Amusement Parks, and Turner International India are partnering this project. It is scheduled to be launched in the last quarter of this year. As far as shopping and entertainment options are concerned, Rohini has M2K Mall in Sector 3, and PVR Complex in Prashant Vihar. There is also a district court at Madhuban Chowk in Rohini.

So, if you are looking to buy or rent a house in west Delhi, you should definitely consider all the options available within Rohini. It undoubtedly has quality housing, good connectivity and all the amenities one expects in a well-developed area.