The Best Kept Secret In Real Estate!

[Just Information]

$$$ Lease Options $$$

What is an Option?

Nothing more than a legal right by a seller to a buyer to purchase property at a pre determined price


Must be in writing
Consideration must be present
Can record
Seller Advantages



Top Dollar Price For Property
Strong Demand For Buyers
Option Money/Rent Is Tax Deferred
Option when exercised is treated as capital gain or ordinary income
Top Quality Tenants
Above Market Rent
Seller Retains Ownership Of Property Receives all tax benefits
If Rent Is Not Paid On Time, Option Is Forfeited
Buyer Advantages



Small To No Up-Front Cash Required
Monthly Rent Credit Builds A Down Payment
Try Out Before Buying
Gives Control / Possession of Property With Little To No Cash
Financial Leverage
Longer Terms Mean Greater Profit - You Can Improve Property To Increase Value
You Can Even Option To Another To Generate Profit
Low Risk - You Can Walk Away With No Obligation
First Create a WIN - WIN Negation



Selling the benefits to a seller
Agree on a pre-determined price
Agree on the terms; payment, option time, credit amount
Agree on the consideration = Money - dead asset/equity in another property - promissory note - repair work - service – etc…
How To Find The Best Deals



Eviction Actions
Homes For Rent
Newspaper Listing
Realtor.Com Lease Option Search
For Sale By Owner
MLS Listings
A Lease Can Accumulate Equity Faster Than With a Mortgage

[lsmith321]

How can I initiate a lease-option from an owner? Where can I obtain the legal contracts?

leon smith

804-741-2293


fax=804-741-4586

[Dan Auito]

How can I initiate a lease-option from an owner? Where can I obtain the legal contracts?

leon smith

804-741-2293


fax=804-741-4586
You should be all set Leon, check your e mail. :SM075:

[Just Information]

This is where you rent with one contract and then sublet to your tenant buyer with two new contracts at a higher sales price. You receive option consideration up front which can be 2 1/2% to 10% of the sales price, positive monthly cash flow, cash at the close from the remaining spread and possible renewal option consideration and notes.

[Just Information]

The Full Price Assignment: You find it, negotiate it, embody it in a good lease purchase contract and then sell it to the lovely couple who want to live in it. You can make money without being adversarial, give the seller the full price they want and provide a positive solution for folks who want to buy, but who lack your specialized knowledge. Your potential profit, the assignment fee can be up to 10% depending on market demand and flexibility. Excellent notes and cash flow can be derived from this technique.

[Just Information]

Similar to The Full Price Assignment, but with one distinction; you sell the contract at a lower assignment fee to another investor. (Believe me, with all the seminars, bus rides and boot camps out there you will have no problem finding these folks). The profit is smaller, but the turnover is fast especially if you have a database of ready buyer/investors.

[Just Information]

This is the way to control a property without the need for a lease. Basically you lock in a price for a potential future purchase. You can hold on to it for appreciation or just sell the contract to another investor.


Tip: For certain sellers you will have to incorporate a "first right of refusal" clause in your contract in order to make the deal happen. This passage gives the seller (optionor) a right to call in the option with a pre negotiated time notice. Example: You have 30 days to buy the property or give me back my option.

[Just Information]

Perhaps you want to keep the option open to buy a home for you and your family. The solution is to just rent it out and let someone else make the payments. Negotiate a long lease with a favorable monthly rent. Tip: Look for homes where the mortgage is paid down and the principle payments are lower.

[Just Information]

The "Subject To" Option: How many times have you been faced with a good deal, but you were concerned about being stuck with the monthly payments? Well, just by incorporating the special "subject to" passages in your contract you can have assurance that you won't have to make a payment until you have found an assignee or tenant/buyer who can make the payments so you don't have to.

[Just Information]

The Cooperative Assignment: This is a strategy that we developed for the reluctant seller who wants to have a say on who you assign or sublet the property to. The advantage of doing this kind of deal is that you have no obligation to make monthly payments to the owner. It is essential that both you and the seller have a clear understanding as to what kind of tenant/buyer/assignee you are looking for so no time is wasted.

[friendlyhomebuyer]

John,
That information is awesome. :SM086: I thought I had read it all or at least heard about it but honestly I haven't heard of alot of the techniques you describe. Do you have books for sale or a place where I can go to learn more about each of these techniques? Thanks again for the great information.

Jamie, go to www.thecreativeinvestor.com and look for Johns materials, there is a whole page of great products!

[Just Information]

friendlyhomebuyer,

I hope this helps - You can find all my ED materials on my web site.

John Michael

[Kerry]

This is where you rent with one contract and then sublet to your tenant buyer with two new contracts at a higher sales price. You receive option consideration up front which can be 2 1/2% to 10% of the sales price, positive monthly cash flow, cash at the close from the remaining spread and possible renewal option consideration and notes.



I was told that controlling is far better then owning. Where can I get the necessary docs to start this process?
Kerry :rockon:

[Just Information]

The forms for doing lease option can be found at many of Dan's links that he has placed at http://www.magicbullets.com & http://www.rentalcashflow.comYou will find them with my course materials and can be downloaded for my Stealth REI Club members.

[LeaseOptionKing]

Just a word on assignments: You can assign any Contract (unless it is specifically prohibited), but you can't assign your obligations or liability. So, be aware of that when assigning to an investor. Your Contract with the Seller can say that you are released from liability and that the assignee takes your place, but that doesn't mean it would hold up in court. You would be liable for what your assignee does if your Seller pursued it. That means you have no control but still have full liability (actually joint and several liability--between you and the assignee). Just a healthy caution.

[Debbie]

This thread is now closed.

JohnMichael no longer participates at Magic Bullets, therefore, he is no longer available to clarify any issues or answer any questions.

Anyone interested in discussing similiar issues/questions is invited to start new thread to copy/paste quotes or include a link to the thread of interest.