The following is a copy of the email I mentioned in our conversation

<Unrelated information deleted above this line>

.......In the mean time, your email got me to thinking more about a lease purchase arrangement, which up until now I had not given much consideration.

After talking to a friend of ours who is familiar with the lease-to-own method of ownership transfer, am surprised that anyone would even consider conventional mortgage financing since we are willing to finance the sale.

I agree with you that bankers are a weird breed.  My impression is that they feel superior to people for some reason.  That is one reason that I have always financed my own ventures ever since I paid our house off in 1987 and I have never had a car loan.  I have found it to be to my distinct advantage to save up my money and pay cash (literally) for everything.  My attitude has always been, why would I let some banker dictate what opportunities I could or could not take advantage of at his whim, after all the highest level he has achieved in life is to become a bank employee and as such obviously hasn't a clue as to what it takes to achieve financial success or security.

I understand that there are many reasons individuals experience difficulty obtaining a mortgage either by lack of credit, poor credit, inability to document their income, lack of sufficient funds for the closing costs and full down payment, those going through a divorce, those who require immediate occupancy and cannot wait for a mortgage process, and those that do not want to commit to a purchase now but want the option to buy and build equity.

While our first preference is to sell outright for cash, in order to open this property to a larger market of buyers, we are willing to consider a possible lease with option to buy or a traditional lease purchase agreement (rent-to-own) which could be arranged with a deposit little as $3000 plus inventory.  However, with our business priced at about the cost of two $42,000.00 Chrysler Minivans, normally there would be some hesitation on the seller's part as to entering an agreement with a party who is for whatever reason unable to secure a traditional signature loan based on his current net worth and independent of this business or land.

To counter these concerns, personally knowing that the documented profitability of this operation is more than sufficient to support the payments, we have no apprehension in carrying the financing until the next owner has a season or two of income from the business to pay it off, or at the least a substantial equity position through the rent credit, that he can easily secure outside financing with very little or no additional out-of-pocket down payment.  Furthermore, this will afford you plenty of time to find the best financing available, which is further to your advantage.

The advantage to us as sellers is by offering our property not only to buyers, but also to renters and investors, is that we expand our market to include all three of these main groups that I understand make up 95% of those seeking to acquire real estate.  As such, our property will sell faster saving us time and advertising costs and since we are selling our property ourselves, we will avoid paying a 6-10% Realtor commission.

The other main advantage the lease/purchase offers to us, over simply renting the property, is that we are then dealing with tenant/buyers who have a vested interest in the property.  Therefore, they conduct themselves as property owners and tend to take better care of it even though they are spending very little money to control a very lucrative and profitable investment.  As a landlord, I am already among the leading credit grantors and as a credit grantor, the two major concerns that I have always faced are collecting rent on time and preventing the destruction of my property, both of which are practically eliminated by the lease/purchase agreement.

With our having just over $800,000 worth of our "spare stuff", cars, houses, and this business up for sale all at the same time, another big advantage to the lease/purchase for us is as sellers, is that we spread the proceeds over multiple years, as opposed to everything falling all in one tax year which lessens our tax liability and once again with no disadvantage to the buyer.

The lease purchase contract is the quickest, easiest, and least expensive way to buy or invest in real estate.  It replaces the typical adversarial relationship that usually exists between buyers and sellers with a win-win concept of transferring real estate ownership.  As a result, I understand it is highly sought after by those who are aware of its powerful features and benefits.  Qualification restrictions are not as strict as conventional financing through a bank or mortgage loan company since the buyer is approved at the sole discretion of the seller.

You are probably aware of the principles of leverage (the use of borrowed funds to improve one's capacity and to increase the rate of return on an investment).  With the lease purchase contract, for a nominal amount of money, you can control property that normally require a 10-30% down payment, without using a lender or going through the loan application process.  Additionally, the lease purchase contract is so quick and easy to use; you can dramatically increase your productivity and, consequently, your cash flow.

The aspect I find most appealing about the lease/purchase agreement is the numerous advantages and benefits to the buyer that are not at the expense of the seller.  For instance, the buyer’s equity will accumulate much faster than with conventional financing.

You simply will not find a faster way to accumulate equity in a property than with the lease purchase contract.  The two examples in the yellow boxes below prove what I say.  Study them and decide for yourself.

If you wish to telephone me at your convenience, I will be more than happy to supply any further information you desire or answer questions you may have.  Normally I can be reached 7 days/week at 217-762-4846.  Afternoons are usually best but feel free to call anytime between 9 AM and 9 PM Central time.

Thank you.

Sincerely,

Steve Shreffler

Stephen J. Shreffler

www.EadesGreenhouse.com

www.SS427.com  (my personal web site)

This Email Address

FOR SALE BY OWNER: Successful well-established Central Illinois Retail Greenhouse, Garden Center, and Nursery Business.  Perfect opportunity for a grower/manager or passionate gardener ready for own business.  9300 Square Feet under roof including retail store situated on large lot in the center of town.  Fully equipped, profitable operation with excellent growth potential and room for expansion.  Priced for swift private sale by retiring owner at only $85,000 plus inventory.  Seller financing possible.  For detailed information, please visit: www.EadesGreenhouse.com  Thank You.

ALSO FOR SALE BY OWNER separately, and in addition to the above, 6 other single family homes in Monticello which are also package priced below market value for swift private sale by owner at only $259,000 for all 6 properties or will sell individually or in any combination in between.

Copyright © 2003 Eades Greenhouse and Nursery.  All rights reserved.

·         Faster Equity Growth -- Equity can accumulate much faster than with conventional financing (See Example #1 below).

·         Rent Money is Working Towards the Purchase of the Home -- Each month that you pay rent; a portion of that payment will be credited towards your down payment or off the sales price (See Example #1 below).

·         Option Consideration Is Credited Towards the Purchase of the Home -- When you execute (sign) a lease purchase contract, you pay the landlord/seller an option deposit.  This money is your vested interest in the home and will be fully credited (100%) either to your down payment or off the sales price.

·         Minimum Cash Out of Pocket -- When you purchase a home conventionally, you must pay closing costs, prepaids, and a down payment.  With a lease purchase contract, you pay only first month's rent and an option deposit.  This will save you between 25% and 85%.

·         Frequently No Down Payment at Closing -- Since you have given the landlord/seller an option deposit, and you have been receiving monthly rent credits, there will frequently be very little additional money needed to come up with for a down payment at closing.

·         Closing Costs Are Delayed -- Your closing costs will be delayed (not avoided) until you and your landlord/seller actually close on the home.

·         Sales Price Is Locked In -- The sales price will be stated in the lease purchase agreement.

·         Profits from Appreciation -- Since the sales price is locked in before closing, any increase in property value will mean that your equity is increasing in the home.

·         Possible Assignment (Sale) of Contract for Profit -- If you are allowed to assign your interest in the home, you may assign it to someone for a price.

·         Buying Power -- Your buying power is drastically increased.  You can get into a lease purchase home or property for as little as first month's rent and a small option deposit.  Compare that to a lender who requires a 5-20% down payment plus closing costs and prepaids.

·         Credit Problems Will Not Hold You Back -- Qualification restrictions are not as strict as conventional financing.  You will be approved at the sole discretion of the landlord/seller.

·         Control of the Home -- You will be put in legal control of the home for a specified period without actually having to own it.

·         No Taxes, Less Liability -- Since you do not own the home yet, you will not have to pay property taxes and your liability exposure will be drastically reduced.

·         Maximum Leverage -- You are spending very little money to control a very expensive and potentially very profitable investment.

·         Time -- Before you actually buy the home, you will have time to repair your credit and find the best financing available.

·         Quick Move In Time -- Move in time is typically less than one week compared to conventional move in times of one to three months from the time the offer was made.

·         No Lengthy Escrows or Mortgage Approvals -- The decision to lease purchase to you will be made at the sole discretion of a landlord/seller rather than by a lender who can take up to a month (or longer) to render a decision.

·         Privacy -- Since you are leasing, there will be no public record of where you live (unless you record your option).

·         Peace of Mind -- As long as you live up to your end of the bargain, you will have full control of the home and can maintain it or improve it as you wish (major improvements will require the permission of the landlord/seller). 

Down Pmt or Deposit

Rent $2,000

Mortgage $8,000

Lease

Purchase $3,500

Monthly Payment

$1,000

$1,000

$1,000

Tax, Insurance, & PMI

0

$3,636

$0

1st Year Cash Paid

$14,000

$23,636

$15,500

1st Year Equity Earned

$0

$791

$3,000

1st Year Total Equity

$0

$2,155

$6,500

                         Mortgage*                    Lease Purchase**

Month #

Principal

Interest

Principal

  Rent

1

$82.29

$817.67

$250.00

$650.00

2

$82.84

$817.12

$250.00

$650.00

3

$83.39

$816.57

$250.00

$650.00

4

$83.95

$816.01

$250.00

$650.00

5

$84.51

$815.45

$250.00

$650.00

6

$85.07

$814.89

$250.00

$650.00

7

$85.64

$814.32

$250.00

$650.00

8

$86.21

$813.75

$250.00

$650.00

9

$86.79

$813.17

$250.00

$650.00

10

$87.36

$812.60

$250.00

$650.00

11

$87.95

$812.01

$250.00

$650.00

12

$88.53

$811.43

$250.00

$650.00

13

$89.12

$810.84

$250.00

$650.00

14

$89.72

$810.24

$250.00

$650.00

15

$90.32

$809.64

$250.00

$650.00

16

$90.92

$809.04

$250.00

$650.00

17

$91.52

$808.44

$250.00

$650.00

18

$92.13

$807.83

$250.00

$650.00

19

$92.75

$807.21

$250.00

$650.00

20

$93.37

$806.59

$250.00

$650.00

21

$93.99

$805.97

$250.00

$650.00

22

$94.62

$805.34

$250.00

$650.00

23

$95.25

$804.71

$250.00

$650.00

24

$95.88

$804.08

$250.00

$650.00

Total

$2,134

$19,465

$6,000

$15,600