The objective of real estate investing is not to have as much financial exposure to the market as you can afford. The objective is controlling as much real estate with a high profit potential as possible. Understanding that objective makes the lease option make a whole bunch of sense.
Truth be told, in today’s market you shouldn’t have any out of pocket expenses when you use the lease option. There are too many homeowners desperate to find a way to sell their homes. You need to find the ones that are ready to get creative by using the lease option to first put someone in the house that more than covers the mortgage payment and then wants to exercise their purchase option to take ownership of the home.
The Objective of Real Estate Investing is Controlling as Much Cash Flow Properties as Possible
Once you find a seller wanting to sell with the lease option, you draw up a letter of understanding. The understanding is that you will take lease of their house as soon as you find a buyer wanting to purchase using a lease option. Obviously, this puts you in the middle and is known as a sandwich lease option.
Never pay the owner a lease option fee until you have a buyer. The lease option fee the buyer pays you will be larger than the fee you pay the seller. Instead of having an out of pocket expensive, you make a profit bringing the two together in the lease option.
Lease Options Leverage Your Cash-flow and Reduce Your Risk
The Lease Option Requires Very Little of an Investor's Time.
If you are breaking into the investor profession and still working a full job, you are going to love this part of the lease option. The beauty of the lease option is the buyer is considered to be a pseudo homeowner...
I want to emphasize to new investors, those of you just getting started, that you DO NOT have to own property in order to profit from it. Lease Options allow you to profit, control, buy and sell property - all without owning it!