Why Lease-Option Financing is a Helpful Strategy in Declining Housing Market

In an ideal world, you wouldn’t even need a Florida home loan. You could just pull out wads of cash and purchase a house with one lump payment. Welcome to the real world, however.

While cities across the state are recovering from the slowest real estate sales on record in the last five years, many people still find themselves priced out of the South Florida housing market. In this region, the supply of homes exceeds demand; subsequently prices are starting to decline.

However, “even in declining markets it is possible to invest in real estate and realize a good profit on your investment, or to sell your own home and get an above-market price for it,” says Miami Realtor, Izzy Buholzer.

What’s he referring to? Just one of the “secrets of making money,” as Bulholzer calls lease-option financing.

Why can lease-option Florida home loans be advantegous?

According to Buholzer, lease-purchase properties are more attractive than ordinary rentals to those seeking a Florida home loan in such a market.

“Many people want to own their own house or apartment but are just not ready to do it immediately. If you offer your property as a ‘lease-purchase’ or ‘rent to buy’ then you will get more responses to your advertisements, and will be able to get a good tenant more quickly,” he continued.

Another benefit to lease-purchase arrangements is that it attracts more “responsible” tenants, which leads to lower maintenance costs.

“People who have entered into a lease purchase arrangement will treat the house or apartment as their ‘own’ because they have a good hope of owning it outright in the near future,” Buholzer explained.

There are more reasons to consider Florida home loans of this nature. For example, the cash-flow for the owner is greater when there is a lease-purchase arrangement in place.

“The reason for this is that in addition to collecting the rent a portion of the option fee will be payable each month,” Buholzer said.

This fee is the amount that the tenant pays in order to reserve the right to purchase the property at a future date.

In addition to lower maintenance costs, the property can be sold up to 15% above the prevailing market price. Buholzer explained that “you can getter a higher amount for the property because the people who are renting from you would not be able to otherwise buy a house are willing to pay a bit more in order to get a chance to buy a property that is attractive to them.”

Buholzer said that, despite this seeming oversupply of housing or a “declining market,” investors and careful homeowners have been able to get a good return on their investments by using the lease purchase financing. It’s something to consider instead of just giving up on Florida home loan hopes until the situation is resolved on its own.