Lease Optioning our First deal= Quick $20K

I'm just curious,do u have a buyers list,or once you get it on paper,do you just put it on the market.But when you find a deal like that,you probably have buyers coming out of the woodwork.

Yes, and yes. We did have a buyers list but it wasn't too lengthy. It is now! If you don't have a decent buyers list, then you need to be prepared to close. We were because of the cash flow. Worse case scenario with this property was to keep it and let it cash flow to pay our note. This particular buyer was not a buyer off our original list. I don't want to be in the business of using exit clauses on a regular basis either, so we had a few options if we couldn't assign. If you have a killer deal, and this one was, you will have buyers coming from all around. And we now have a lot of buyers for our list, generated from interest in this property!

However, if you don't have private money set up and want to stick with assigning, you probably should have some buyers lined up first. Sometimes, what you might deem as a great deal, a buyer might not, so it can be risky to lock it up and hope for a buyer. I'm speaking from experience. We had one locked up on paper that we couldn't assign and did have to exit. It wasn't a problem because we had our contingencies, but I don't want to do that again.

Congrats on your deal....however, many don't mention how your buyer structured his deal. He got owner financing and deferred the down payment to June. So he has $1500 coming in for Feb, March, April, May.....$6,000 of which he can use $1,000 to make 4 monthly payments of $250 each and $5000 to give you the down payment. So there is an example of how you can do a deal with no money and no credit also.

I am so happy for you. I hope this deal works out great for you. I hope more deals come to you soon.

Steve.

Very true! It's definitely a win-win for buyer and seller! Just remember that he will have to refinance or pay us in full the remainder ~25K, 8 months after that. Buyer has other solid cash flow that allows him to do this. I wouldn't recommend owner financing for only 12 months if you don't have the means to get refinanced in that time.

Thanks I'm also in the process of submitting offers on 20 properties that have been on the market for over 120+ days. I was just curious if using a PML would be a better way of approaching it rather then just using your buyer to make the down payment instead.

I watched Greg Murphy and Matt Larson's success story video's and I noticed they purchased most of their homes before cash flowing them...

Anyway I guess I'm a little nervous because so many different people have told me that L/O's can be a liability too me. Mainly because they buyer may miss a payment or damage the house. Those two factors scare me a bit. However I'm going to move forward with it.

The property owners are already interested in the L/O offer's my real estate agent submitted. They are now just interested in meeting me face to face to finalize it.

wish me luck lol I'm scared haha!

Congrats on your deal! Great job!

Karen

Way to go!!

Congrats to you, also I PMed you. I would love to discuss some things with you.

Thanks,

Stevin

Frederick,

If you can use your buyer to make a down payment, then I would do that. My obstacle is finding enough lease option buyers with a substantial down payment, especially on single family homes. If you are leasing to another investor, then many will be able to cover the down payment. Also, on this deal, our seller wanted the mortgage out of her name and sold, so the sandwich lease wouldn't work. However, the sandwich lease is the strategy it sounds like you're looking at. I don't know if Greg uses private money for any of his lease options, but really it depends on the sellers situation and finding a qualified buyer with down payment. You just have to find a buyer that pays you more than you pay the seller and can pay you off sooner than your lease option is due with the seller. If the seller is interested in lease optioning with you, then I don't see why you would need PML.

Also, remember that a lease option buyer is putting down an (usually substantial) option payment that is non-refundable, so you would hope that they would take care of the home more than a normal renter. As with anything, there are always risks, but it seems the rewards would outweigh the risks more often than not. Don't let the unknown paralyze you...you'll do great!

If you have any more questions, feel free to PM me. I may miss something on this thread and I will get back to you quicker. I'm still new to investing, but I would be glad to share whatever knowledge I can.

I just wanted to add one more thing. The property we're buying is a cash flowing property from day 1 and our end buyer is another investor, so even if something goes wrong with our lease with him, we have our payments to our PML covered. In single family residences that your end buyer is a tenant-buyer, then you don't have that hedge against non-payment. And your payments to PML will still be due. That's one reason I like multifamily and selling to other investors. However, if you are doing your due diligence throughout the entire deal on the property and on the buyer, then you are definitely minimizing your risk.

Thanks Dean. I am working to get more buyers and I believe that I will complete some deals before the event. I made a deal with my self that I can make 3 deals, I will come to the event. Based upon talking with some people that might complete some deals with me, I believe it can happen because it is amazing how I have met a few people that are excited about the real estate opportunities because of the current real estate environment.

Thanks you so much for this program. It is great to know that I have not missed the opportunity to take advantage of the real estate market. I thought about becoming a real estate agent, but, it would have been the wrong move because I can take action right now.

Thanks,
The Gambler

I think this is a pretty good example of a Lease option. What was the sellers original asking price, and what was her bottom line price?

midwest_invest wrote:

We are getting ready to close on a 4 plex in our town Feb 1, so I thought I would share the details. Motivated seller saw one of our flyers and called because she was having medical problems and just wanted out. Property assessed at 54K, cash flowed $1500/month. We offered her 10K and she took it. Within a few days, we had cash offers of 15 and 17K to assign it. Could have done that for a quick 5-7K, but decided to be patient and make more $$. We have a private lender to lend at 7% full purchase price plus extra 4K for rehab. We decided to advertise seller finance/lease option for this property and had it sold within a few days. Buyer offered us 30K if we could finance for a yr. So, it looks like this: buyer is to pay us 5K down due in June, $250/month (our payment is $100/mo), and the remainder of the 30K is due within 12 months. He is doing all rehab and is covering all expenses. We will walk away from closing with 4K in our pocket and then make another 15K within 12 months. Not bad using none of our money!! And about 2 hrs. of work! Now working on our next deal! Our private lender wants to partner with us on some storage units, so we are looking for some right now to buy. Anyone in the midwest have any?

Awesome job on this....thanks for sharing the details so we can all see how it was done. Keep going you'll be there before you know it