25 Jun Pewter Mist Court
Pewter Mist Court, Oviedo Florida
Have you ever had the feeling when you found “the one”? I’m not talking about a spouse! Whether it’s a house or a car or anything, you know when it is right for you. That is how we felt about this property, that we called home for 2 whole years.
In 2015 we were looking to buy our first house, we did tons of research and knew where we wanted to be. When we found this house, it was EVERYTHING we were looking for. It was “the one”, in fact it was the ONLY house we looked at (crazy huh?). For us, it was where we were going to live for a long long time.
But as plans often change, as did ours, we found ourselves searching for a home in another state! So, that left us with the question: What to do with this house?
95% all of all homeowners would have come up with the same conclusion, SELL IT! About 4% of those more entrepreneurial would have thought to rent it out. But I can assure you less than 1% of folks would have entertained a Lease-Option to maximize earnings on this asset.
Thanks to Augie Bylott and the training through Creating Wealth USA, my first thought was to find a tenant-buyer who would lease our home for 2-3 years, put down a non-refundable option fee between 3-5% and close on our house within 3 years.
Why go through all this trouble you ask? Here are the 3 top reasons we chose to go with a Lease Option in lieu of other more conventional selling techniques.
- Deferred Taxes – by closing on this property at a later date, we are deferring on the taxes we will have to pay. In fact, because this was our primary residence we will completely avoid capital gains taxes on this transaction.
- Rental Income – for the 2-3 years we are leasing out this property, we are receiving income which could add another $7200 to the total net profit.
- Appreciation – in the Oviedo area, homes are still appreciating at a massive rate. By selling at a later date, we agreed to a price that is 7% higher than the current appraised value on the house.
So, what did this deal look like?
Bought in 2015 for $295k w/ 5% down.
Signed a 3-year Lease for $2,000/month
Collected a $22,500 Option Fee
Option Amount is $312,500 ($335k minus option fee)
Estimated profit at time of closing in the next 2-3 years $50,000
Considering the net profit estimated if we sold outright, after commissions, would only have been $30,000 – we are more than doubling what we could have made.
This is why they say “Knowledge is Power” 😉
Most importantly, is the tenant-buyer was someone we personally knew who happens to be very successful but is self employed and just needed a little more time to qualify for a mortgage. We were able to help a great family who the banks turned down due to their strict regulations. This was a calculated risk and we are very confident this deal will work out exactly as planned!
We may have other properties available as a Lease Option. If you’re interested, click HERE and fill out the form so we know who you are and what you need!