I recently came across a Craigslist ad for lease option in Oceanpointe in Ewa Beach. 3 bedrooms, 2.5 bath, 1,500 sf. Nice pictures in the ad.
So I was curious as an investor. As this may be a good deal to get into.
Lease option is one way of investing in real estate with no money down, if you did not already know.
So I responded to the ad to find out more about the lease option.
This is the responds from the owner:
"...the price to purchase this option is a 3.5% of the sale price upfront (we can go over it in person, if you want to see the property) it's option sale price is $600K with an option to purchase in 12 months and the monthly lease payment is $3150 (which includes the $89 association/maintenance fee), you will pay for all other utilities. This will give you a opportunity to test out the property before you purchase it..."
I emailed for more information to find out how much of the lease option fee and rent will count toward the down payment at 1 year.
The person called me today.
3.5% of the purchase price of $600,000, which is $21,000, is the fee you pay for the "option" or privilege to buy this property in one year at $600,000. Actually, $600,000 is a pretty good price for this property. None of that $21,000 will count toward your down payment in a year.
Then, on top of the $21,000, you still have to pay a monthly rent of $3,150, which is $37,800 for 1 year. Again, none of that counts toward down payment to purchase.
That's a total of $58,800 wasted for just one year, if you can't get financing or you changed your mind.
If anyone has that kind of money to spend 1 year, why don't you just use it toward a down payment. Besides, you can get a 0% down USDA loan in Ewa Beach.
You'll pay a lot cheaper monthly in mortgage.
So dumb and so greedy.