Real Estate Investor Articles

The title of this article: "What's Better: Lease Options Or Subject To" is misleading because each one has its pros and cons. Neither using a lease with an option to buy or getting ownership and paying on an existing mortgage is always better or worse than the other. In fact, there are times when you'd be better off using one and times when it is to your advantage to use another.

In two previous articles, I discuss how "subject to" is similar to "lease options" and how they differ. In this article I will share an example of when it might be better to use one over another. Of course, there are other examples that you might discover based on your unique transaction, real estate market or personal situation, but here are two examples.

Here's the first example: if you are uncertain about whether a real estate market is going up or down do you want to commit to owning a property? In times when the market has a strong chance of going down, it might be a an advantage to

Follow up:

have an option on the property like with a lease and option instead of committing to ownership like you do when you buy a property "subject to".

Here's a second example: What if you are uncertain about where the seller will be in a year? I've bought houses from folks that were being incarcerated. Try closing out a lease option with someone who is in jail somewhere and is not feeling very flexible about the option at this point. It might have been better to finalize the transaction by buying the property "subject to" in that case.

Since there is so much variation between transactions, markets and your particular situation, you can't automatically say that lease options are better than "subject to" or that "subject to" is better than lease options. You need to understand the pros and cons of each and make that decision with the help of your Dream Team.

Until my next post,

James