Lease Option Investing: Real Estate’s Best Kept Secret?
It was Rockefeller who said “Own nothing, control everything.” In other words — Don’t buy. . . Rent!!
Now I can hear most of you saying, what a crock! What kind of investor would advise anyone to rent instead of becoming an owner? That, of course, would be me.
What if I showed you a way to profit in real estate without large cash deposits; not having to apply for bank loans, no overhead, no maintenance, no taxes, no insurance or home owner fees to pay? You would probably say that I am out of my mind.
Well it’s time to learn about what may be the best kept secret in real estate: it’s called a Lease Option, also known as “rent to own.” Anyone can control real estate that generates immediate positive cash flow without having to become a real estate expert or by having to look at hundreds of houses. If you understand a simple lease and option to purchase, then you can put together all kinds of profitable real estate transactions with just a newspaper and your cell phone.
Controlling real estate through a lease option is by far the superior method of financing your real estate investments. Using a lease option helps remove the traditional adversarial relationship that exists between buyer and seller and produces greater profits.
In most real estate transactions there is a natural tendency between the buyer and seller to try and one up each other. The buyer wants a lower price; the seller a higher one. Not to mention all the other items that have to be negotiated. Next, all of the difficulties associated with deposits, qualifications, appraisals, title companies, lenders, escrows, lawyers, and on and on and on. Lease option investing eliminates these difficulties and lets the buyer and seller have a win-win experience and get the deal done.
A lease option has everything an you need as an investor to make prudent and profitable investments in real estate. Using small down payments (yes, even just $1.00 down), you can control properties that could require 20% down when using bank financing. And we won’t begin to talk about all the hoops you would be expected to jump through.
A good deal will generate you profits in three ways:
Cash now from non-refundable option consideration,
Cash flow from a monthly rent, and
Cash at closing
Controlling properties by lease option is absolutely the best way to be involved in controlling homes in obtaining great cash flow, high profits and minimum risk. Investing by lease option can be the best way to create quick cash flow for the newbie or seasoned investor.
Thanks for reading. Let me know what you think in the comments area below, and hey – tell your friends about us!
Hey Bill, great post. I’m glad that you decided to start up a blog, but maybe I’m late. Either way you know I’ll be sure to bookmark your blog and follow you.
Thanks AJ! Glad you dropped by 🙂 And thanks for bookmarking the blog.
Love me some lease options! Opening up a whole world of possibilities for my investing business. Thanks for the great article, Bill!
P.S. Please add the “subscribe to comments” plug-in when you get a chance 😉
Thanks for stopping buy Shae! Lease Options are one of my favorite investing strategies. And I’ll look for that plugin 🙂
I saw the ads in our small-town newspaper for years before I realized exactly what was going on. They were always the same: A house for sale with 5% down and payments of 1% of the purchase price.
Hello Bill,
Just today I warned someone about the pitfalls of lease options. I would like to understand how it is you would structure a L/O deal that would include buyer protection in the instance of a foreclosure or of non-payment by the seller and how someone could actually get in for “even just $1.00 down” or even for less than 3.5%. I certainly don’t know all of the creative ways to purchase, even after being in real estate full time for eight years. I would really love to help this couple who were asking me about L/Os, so I appreciate any feedback on these questions.
Sincerely,
Nannette
Hi Nannette! Thanks for stopping by and leaving a comment 🙂 If the seller doesn’t make the payments and the property is foreclosed on, the option would be extinguished. To prevent that I would either a) make the payment directly (and pay the difference, if any, to the seller) or b) have an escrow account with the agent making the mortgage payment and paying the difference to the seller.
The option fee is negotiated by the seller and buyer and can be any amount on which the two agree. If that amount is $1.00, then it “is what it is.” When the buyer exercises the option, the lender providing his financing may require a certain amount down at closing, for example the 3.5% that you mention. Some lenders (but not all) will allow the option fee to be applied to the down payment, and I think that is where some confusion arises.
Hope this helps. If not, feel free to ask additional questions here, or shoot me an email to : [email protected]
I am glad I found your blog, thanks to Julie with RevNYou. You provide great information on the very subject that gets my motor going.
Do you have a mentor/coaching program? You have such great information. And you get the information across in a very simple form.
Keep it coming. Bill
Welcome! I’m glad you found the blog 🙂 Julie and Dave are great, aren’t they? And yes, I do have a mentoring/coaching program. Thanks for asking! And thanks so much for your kind comments about my posts. Please feel free to send me an email (or use the contact form at the blog) if you have questions or suggestions for a blog topic.
Happy investing!