OfflineThere are so many avenues to pursue in real estate, it can be a little daunting to make sense of it all and figure out which avenue to take. So daunting, that I think that's one reason that people look at real estate, but then don't pull the trigger. They just aren't sure which way to go. I thought I would say why I personally like lease options, PARTICULARLY if you are starting off. I wanted to discuss why I chose lease options eight years ago as my way to success, and why I think lease options are one of the best ways in this market to find your own way to success.
They may be for you,they may not be, it depends on what INTERESTS you and what you are wanting to achieve.
If you've read DG's information, but find yourself unsure or on the fence as to which road to go, go back thru, and list the areas that you find interesting, and list pros and cons of each.
For me, I chose lease options. I hope this info helps anyone that was on the fence like I was many years ago.
1. Lack of Risk - Most areas of real estate carry the same downside. Risk. Whether it's buying foreclosures or flipping a house, there are a number of risk factors, including the obvious factors: the initial capital required and the capital at risk depending on how long the property sits empty. However, with lease options, there is essentially no risk, and there is ZERO capital at risk. How sweet is that?!
2. Learn While You Earn- Maybe you're interested in rental properties or flipping houses. Well, there is no better way, in my opinion, to learn an area and market than with lease options! I guarantee that after doing lease options in your area, you will know your territory far better than most any other real estate agent or investor, and here's the major bonus: You get to EARN while you LEARN! What do I mean by this? While you are working your lease option business, you are learning valuable information that is crucial to investing, such as specific market rental values, what the demand is in various areas, and market values, all while making money in lease options and with no risk! So if you decide to make the transition to rehabbing houses or buying foreclosures etc., you'll already have a Ph.D in your area - and you got paid to do it!
3. Lease Options Are Perfect for Down Markets! Let's face it: if a seller can put a sign in the yard and get three offers in a day, they really don't have a need for a lease option. However, if the properties sit empty for 6 months...well...hello lease option!!!! This is a fantastic market for lease options! We are in the right place at the right time!
I've seen some really good info here on lease options, so I'd recommend going back and reading some of the info here as well as following up with your coach if you have one. If you are using a coach or mentor, USE THEM, that's what they are there for.
John Jackson
Tequila taster, pilot, lease options guy
Leasing to Buy,LLC
Sandwich Lease Options.
One of our investment strategies is to buy and hold. What better way to do this than Leasing a Property with an option to purchase and turn around and lease with an Option to a new buyer. Let's say that you get a two year lease on a property for $1000 option consideration, rent @ $1000 per month with a purchase price of $75,000 and you turn around and get $1500 option consideration from the new buyer and rent to him for $1200 a month and give him an option to purchase for $95,000 in two years you are making money up-front, monthly and when the option is exercized. NOT BAD for just controling a property and having cash-flow.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
Thanks John for this post, this is the direction that I am moving in and look forward to more information that you will be sharing.
Erika, REI
Brownstone Investment Group
405.748.0734
www.facebook.com/Erika.Coleman
www.twitter.com/brownstoneREIgr
Job 22:21 Submit to God, and you will have peace; then things will go well for you.
Job 22:28 You will succeed in whatever you choose to do, and light will shine on the road ahead of you.
Deut 28:8 The Lord will guarantee a blessing on everything yo do and will fill your storehouses with grain. The Lord you God will bless you in the land he is giving you.
Thanks for the post! Great info!
Karen
"You're never too old to be what you were meant to be!"
www.deangraziosi.com/real-estate-forums/investing-journals/59128/day-for...
"Shining Like a Star & Dancing on Sunshine"
"Shoot for the moon! Even if you fall short, you'll still land among the stars!"
Hey John, GREAT INFO and THANK YOU for sharing your knowledge.
BRING IT ON!!!
HAPPY NEW YEAR
Attract Private Investors to fund your deals so you can do more deals while using Other People's Money (OPM). For more info go to:
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Regards,
John <>< Future DG & DL REI Billionaire
ASPEN PROPERTIES "I BUY (ALL CA$H), HOLD, LEASE & SELL Commercial and Residential Properties" ANY LOCATION, ANY CONDITION, ANY PRICE
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Great post,
It helps to have specific, short and to the point money making stratigies.
Best Wishes!
-Dan
Dan
www.danbuyshomesfast.weebly.com
Great information. A post that is short and to the point.
Brad
This is a great strategy, one that I have used for many years, on the selling side. However, how is the title protected against future liens against the current owner if the property is just being tied up on an option? The option can be recorded, but this only prevents the seller from selling it to someone else, it doesn't protect the title. The last thing we need is to go to closing two years down the road with our new tenant/buyer only to find out there have been tax liens, judgments etc attached and clear title cannot be conveyed.
Maybe there is some way to accomplish this. I am open for suggestions.
Meanwhile, subject-to seems to be the best way to protect the title. You can still get a tenant/buyer in the property with the same result, except you have ownership of the property.
I am studying the material and hitting the streets looking at houses and working on two deals, my first. I am going to need help.
trying to get and investor to come in on the deal;
Nice home; This is a rancher with 3 bedrooms, 2 full baths, 1288 sq.ft., a nice back deck, fireplace, detached garage and fenced in back yard. The selling price is $75,400. The estimated value is $130,000 and I offered $49,999 for this home.I am working with a real estate agent who is in my circle. Hope to hear from the owner today who is Homepath, fannie mae
ALL HELP IS WELLCOME
I love this topic and am in the middle of potentially having my first sandwich lease option wrapped up. The good news is their are already renters in it, I know I typically would donthe option fee and that may still get done.
I just have a few questions I'm hoping someone could answer them.
First off, is a title company the best way to record the option with my seller so I stay in drivers seat, can it be motorized?
Second, since their is already tenants renting it out till July, does this hurt my lease, and i should probably do a new lease correct?
Since their lease is in place, i won't be making a lot off the monthly flow, but i feel this gives me time to market with rent getting paid at least.
At close, is the best thing to do just sell my interest or assign it, double close, etc.
Any other thoughts???
First, you can record the memorandum of option at the courthouse to cloud the title, but it doesn't protect against liens as mentioned a few posts above.
I would talk to the current tenants about buying the property. Pull credit, see where they stand etc.
In regards to assigning it, you would have to have the paperwork adn agreements in place to assign it, which you may, it depends on your docs. If the #'s work, just keep it to try to sell it to the current tenants or the next ones.
The double close can be a whole other ball of wax now that things have changed. Sure you can find a title company to do it, but I've seen lenders really raise an eyebrow over it. Not to say it couldn't be done, but you'd want to do some research on that end.
I strictly do assignments, so it's not a factor for my model.
Also, keep i mind lease options are great, but NOT perfect for any and all situations.
If you have a house that's in FC, a LO doesn't fit. What are you going to do? LO it so the new tenant can be evicted?
So be aware of that. If the owners are $50k upside down, a LO isn't a good fit.
John Jackson
Tequila taster, pilot, lease options guy
Leasing to Buy,LLC