Check these important tips to help you save a lot.
A new kind of real estate fraud is on the rise. Here are some related cases:
Case 1: Renters will be forced to pay owners who do not disclose the fact that the rented home is nearing foreclosure. Typically, lease-option deals have already been set. The bank finally repossesses the house then issues an eviction notice to the renters.
Case 2: Landlords will charge a high option fee and create an opportunity to terminate the contract. Some contracts ask renters to shoulder maintenance expenses and if they fail to shell out the required amount, the landlord will easily evict them and find a new renter who will pay another option fee.
Case 3: The tenant is required to pay a large up front fee even though the landlord has plans of setting the option price that is high enough for the tenant to be discouraged in the end. In lease-option deals, the landlord always keeps the initial payments should the tenant decide not to purchase the house anymore.
Here’s a video explanation to make things easier to understand (although we find the voiceover a bit too eerie).
So how do you avoid these scams?
Tip No. 1: Contact your loan officer and discuss your eligibility to qualify for a mortgage once you go into a lease-option deal.
Tip No. 2: Do a credit check on your landlord to make sure that your money goes into your real estate investment and not to someone else’s pockets.
Tip No. 3: Always anticipate the future expenses that you will make. If you’re planning on adding children, make sure that you factor in your additional costs.
Tip No. 4: Read the contract before signing it. If possible, have a real estate professional look into the details so you are guided.
Tip No. 5: Be prepared to lose your money if you violate any terms of the contract. This is the risk that you will have to take. If you are sure of your financial situation, then there’s no reason to worry.