Based on decades of experience, I am fully resolved that buying real estate with lease options is the fastest, easiest, and least expensive way of investing in real estate. While it’s not always a simple task finding a lease option seller, finding lease option buyers is quick and very profitable. Fast because it greatly increases your number of potential buyers. Easy because the buyer isn't immediately looking to qualify for a mortgage or waiting for third party approval. Least expensive for the investor because you take control of the property without the costs of buying it.
Don’t underestimate the importance that buying real estate with lease options brings in the most potential buyers. This is important not only because it enables you to sell for the highest price but it also enables you to mitigate the highest risk a lease option investor faces - finding highly qualified people interested in buying real estate with lease options. Clearly, the larger your pool of buyers, the more likely you are to find several that are on the brink of being able to qualify for a mortgage to finalize the purchase and deliver your largest profit in the deal - the sale.
Buying Real Estate With Sandwich Lease Options
When an investor is involved, buying real estate with sandwich lease options becomes the preferred method. This creates the win-win-win scenario. The investor enters into a lease option with the seller including a contract clause allowing him or her to assign the agreement to a third party or enter into a completely separate agreement with a third party. Win #1 - For investors, buying real estate with lease options allows him or her to control more properties with less money invested.
Win #2 - The seller begins collecting rent without becoming a landlord and you, as an investor, find the end buyer to collect a larger lease option fee and begin collecting a little more rent than you pay to the original seller. Win #3 - The end buyer (that the investor also does a lease option with) now has a home without the hassles of immediately qualifying for a mortgage along with the ability to complete the purchase in the near future – to deliver the largest payday to the investor.
As the investor, you want to work with the buyer/tenant to remove whatever roadblock is temporarily preventing him or her from completing the purchase. By doing this, for the cost of an option fee, you collect a large profit when the house does go to closing.
Investor Benefits When Buying Real Estate With Lease Options
There many benefits to all involved in lease options. In fact, too many to cover in a single article or blog. Be sure to learn more by reading my other blogs. Here's a short list of investor benefits that come from buying real estate with lease options:
- A top sales price from the end buyer.
- Positive cash flow.
- The largest list of possible end buyers.
- Minimum risk because you're not the owner on the title.
- Few or no commissions and fees.
- No maintenance (the end buyer is responsible).
- A large non-refundable option deposit.
- Largest profit when the home sells.
You're offering a huge value to the tenant/buyer when you have an attractive financing plan. This translates into the ability to ask for a higher selling price (even in a slow market). Any reasonable tenant/buyer easily understands the concept of trading price for time and value.
Once you have the lease option in place with the end buyer, don't just sit back waiting for them to pull the trigger on the final purchase. You still have skin in the game as the investor. Stay in touch with the buyer to work with them repairing any credit blemishes to qualify for a mortgage. There will be a specific option period this needs to be accomplished within. To make this work, your option period with the seller needs to be longer than the option period you have with the end buyer.
However, you only need to check in with the buyer once a month to verify they are following the plan you helped them put in place. All along, you are making a recurring profit when the rent they are paying to you is more than you are paying to the owner.
Buying real estate with lease options really is the fastest, easiest, and least expensive way for an investor to maximize profits for the least investment and risk.
By Wendy Patton
For more than 30 years, I've used the Sandwich Lease Option System to earn myself and my students millions of dollars. From my experience, I know there is plenty of room and opportunity in the real estate investment market for everyone wanting to participate to find profitable deals. It's because of that fact and my personal success that I share the Sandwich Lease Option System with others.
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