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Go To: Home > Tips & Strategies > Tip 6

Buy a home quickly and easily for very little cash down

by Jeff Beaubien

All of us would like to buy a house for as little money out of pocket as possible. This allows us to have a reserve of cash as security plus allows us to use our money for other things like investments, vacations and big-people toys (my personal favorite is computers).

You may be asking yourself how can you buy a house for less than 5% down plus closing costs and prepaids (which typically amount to an additional 2% of the purchase price). My answer to this question is short and sweet -- the Lease 2 Purchase contract -- OF COURSE!

" I bought the home..."

This real-world example will show you, step by step, how quick and easy it is to buy a home with the Lease 2 Purchase contract. In fact, this is how I bought the home I'm living in right now...

While sitting at my desk shuffling through some paperwork, I got a phone call from a friend of mine who knew I was looking to move near his neighborhood. He told me that he had just drove by a beautiful home that had a "For Rent" sign in the front yard. He said it would be perfect for me, so I packed up the SUV and drove by the home to see what it was all about.

It was perfect!

I jotted down the phone number from the sign and returned home. I did some research to determine what the home might be worth and what the fair market rent was. With my numbers in hand, I drove back out to the home and knocked on the front door.

To my amazement, it was Paul and Stefanie who were clients of mine when I was selling insurance a few years ago. I couldn't believe it! We talked about old times and, in short order, got down to business.

Paul told me that they were asking $1,600 per month for rent. I asked if they would consider selling their home and they said yes, as long as they got at least $180,000 for it. I knew from my research that their home was worth slightly more than that.

I offered them the following Lease 2 Purchase deal, which they accepted without batting an eye:

Downpayment: $2,650 (first months rent plus $1,000 option deposit)
Rent: $1,650 per month
Rent credit: $300 per month
Term: 4 years
Sales price: $195,000

What did the sellers get out of all this?

Paul and Stefanie now have a positive monthly cash flow of $480, they have a tenant who will take care of their home as if it were their own (which it technically is), they have a written sales agreement for $195,000 in 4 years PLUS they saved over ten thousand dollars in real estate commissions.

What about me?

In 4 years I will have over $15,400 in equity ($300 x 48 months + $1,000) so I probably won't have to come up with a down payment at close, I paid a minimum amount of money to gain control of a beautiful home... plus my closing costs are delayed for 4 years. Even better, I will profit from any appreciation in value of the home plus I don't have to pay any taxes nor do I have any liability exposure.

"...took less than two days to complete!"

And this entire process took less than two days to complete!

The best part? If I decide that I no longer want the home, I can assign (sell) my option to a third party for a tremendous profit! (This is covered in another tip.)

People do this all the time. They are doing it as I write this! Real estate brokerages have entire divisions set up to exclusively handle Lease 2 Purchase deals. If all these people can do it, so can you!

The numbers don't lie. The Lease 2 Purchase contract provides for the best financing terms you will find in any free market in the world.

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