Lease Option

Have you found a motivated seller to do this yet? If so, find out about the existing mortgage if any, How much are the payments, arrange your option according to the payments, for example, what I did was to sit down with the owners after they agreed this is something they could do. I put out bandit signs rent to own, and my number. Calls started coming in. I just screened them based on where they worked how long, asked for references of the last rental they did. Most important question, do you have any money to put down? I usually ask for 3000-5000 depending on the deal and how much is owed. Monthly payment etc. I also ask them where they are looking to stay around as far as payment, so I can get a feel for how much they can afford to pay. Match up the right tenant/buyer with your deal. Sign the contracts, collect the money and go on to the next deal. I did offer the owner 1000 simply to sweeten the deal, and just said I will make your payments for you. You always have me to fall back on. This creates rapport with the seller and lets them know they have nothing to lose. It frees up money for them each month and you make anything over the payment amount plus you get the rest of the down payment. Not too shabby huh? I do a minimum of a 2yr lease with the seller and future buyer, If in that period they decide to buy, It's all good, I inflate the price 5000 10000 or so, credit the buyer with a small amount going toward the purchase price, and the money down is a non-refundable deposit. Hope this motivates and helps you. It works. Make sure to ask ask ask questions about the home, liens. existing mortgages, taxes owed to cover your butt. Good luck! Kevin

Hello,
In new to this site..I found what you said very insightful thank you..Couple questions, if you inflate the price 5 or 10k do you get that profit? Also, what if the rent to own buyer does not buy? Are you on hook? Thanks

Hi ladyflo,

Great decision, lease option is a great way to start to make money and generate a positive cash flow with out any of your own money or credit. Not to mention that down the road when the tenant buyer decides to buy you make a nice junk of change. I hope that you have the Your Town your Profits REP book.
Because, Greg Murphy give us all the details on how to do lease option. Its in chapter 4 and it’s a wealth of information. If you have it read it over and over and I believe you will get the whole picture of how to do it.

Go do it girl and have great success. Let us know how you do.

Yes, that is the point of doing it this way, you make money up front, if you cover the payments, you get a cushion, and when they buy you keep the difference, however be upfront with the seller, tell them your intentions. You don't do this for free. Find out what the least amount they will take and agree on your price. sign contract with the owners. Find a buyer and inflate it enough to make a nice profit, but, don't over price. And yes, you are responsible if they don't pay, but, you just do it all over again. with your terms and money down with another buyer. So, It is a win- for everyone involved. Kevin

What Greg says is to be sure that you can lock up the deal at what the seller owes, when possible. That way when it sells you only pay what the balance of the mortgage is at the time of final sale. The tenant that agrees to the lease option will be making the payments and paying that principal down. So when he can finally close, the mortgage is less than it was when you locked the deal up. That is why you can afford to give some type of rent credit toward the purchase price. Win-Win for everyone.