Archives for November 2010

Real Estate Is a Business!

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Real estate is a business – plain and simple. You’ll need to plan, analyze, negotiate, write offers, manage, market, and sell just like any other form of business. A business does not stay in business for very long if it’s not producing a profit!

In real estate, there’s a certain level of commitment required, but that commitment pays off handsomely. And, unlike many other businesses, real estate allows you to control your hours and set your own schedule. You set the goals you want to achieve, and then you set out to make them happen.

As part of being a businessperson, the most important attitude any investor can have in this field is one of…objectivity! As human beings, we have a tendency to fall in love with certain houses or, conversely, hate them upon sight. Of course, this is a natural tendency since homes at their core represent security, safety, love, family, etc.

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Real Estate Lease Options

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In simplest terms, a real estate lease option is the right to control a property without the obligation to buy it. As a real estate investor, when you have such an option, you have the opportunity to buy a property during a set period of time, but you aren’t required to do so. The time period is agreed to by you and the seller at the time the agreement is signed. If you don’t exercise your right as a buyer, the lease option expires, and you have no further responsibility to the seller. In most cases, you’ll have to pay an option fee. That fee may or may not be applied to the property’s purchase price, depending on the circumstances of the situation.

As with any real estate investment strategy, there are benefits and downsides to lease options. One of the great benefits is that they’re inexpensive in terms of the amount of money you have to put into each deal. This is to say that you only have to lay down a small percentage of funds instead of needing to raise the full amount to control a property.

Here’s an example to illustrate this point: Assume an investor wants to buy an option on a property. The property is worth $200,000, and the option fee amounts to 10% of that price, which is $20,000 and considerably less, obviously, than $200,000.

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