Month: October 2020

There is not a more creative way of buying real estate with lease options than by working directly with the seller. There is absolutely no reason  you can’t work with realtors and I write about that often. But when you work directly with the seller, it becomes a little easier for the two of you to come to a meeting of the minds.

I’m giving away key information today in the form of highlights and tidbits about buying real estate with lease options.

Know How Much You’ll Make on the Deal

Before ever signing any paperwork, a knowledgeable investor always has a very good idea of how much money he/she will make on the deal. That’s where this old real estate adage comes from – “You make your profit when you buy – not when you sell.” In this particular situation, you make your profit buying real estate with lease options directly from the seller.

Not only do you want to know how much you’ll make before signing the paperwork, but this is also the information that empowers you to negotiate the deals that you want to be part of. Smart investors do a little homework upfront to define the profit points before making a firm proposal to the seller. If you don’t follow my blogs regularly, you might want to go back and read these two previous blogs:

Selling Real Estate on Lease Options – By the Dollars

Selling on Lease Options – For Big Profits

Buying Real Estate with Lease Options – Highlights & Tidbits

Knowing most of the financial details upfront is key to structuring the deal from the beginning. That’s exactly what the course materials are all about and here is a glimpse inside:

* Know how much money the seller wants at the beginning of the deal. It may or may not be an amount that you can work with.

* Clearly know what the property is worth in today’s market.

* Using my proven formulas, calculate what you can expect the property to be worth in the future (over the life of the lease option period).

* The expected future value is critical to your profit.

Sandwich lease option investors love making profitability calculations.

These numbers may not be the final profit that you earn but they will give you a good indication before you make a firm offer when buying real estate on lease options directly from the seller. You’ll be locking in your option price with the seller based on the current market value (possibly at a discount). The price you offer to the buyer is based on the anticipated future market value. This is the premium price a buyer pays for the ability to purchase on a lease option. This is where most of your profit comes from.

The premium price to the buyer is very important but it’s not your only profit point. You’ll also get a monthly payday from the rent-price-spread and the lease option fee that the buyer pays upfront. The worksheets help you calculate all of this information before buying real estate with lease options.

Other Considerations Before Signing the Deal

Several considerations go into the amount of time you negotiate for on the lease option with the seller. Market conditions should be one consideration. Regarding the lease period, your number one consideration is that your lease period with the seller be longer than with the buyer.

I give serious thought to the particulars for each deal but typically plan to offer the buyer between 12 and 18 months to complete the deal.

Other than my students and myself, I don’t know of any other lease to own investors who consider the time of year that the buyer’s lease option will expire. I do this because if the deal doesn’t close, I want the house back during the busiest market time of the year – the spring market. Of course, my option period has not expired when the buyer’s time expires, so I still have an opportunity to put a different deal together.

Just like the premium sales price for the buyer, you want to have a good idea of how much you’ll be able to charge for rent. Because this is going to be an active deal for a year or longer, you want to know how much positive cash flow you’ll have each month.

Positive cash flow is an important consideration for how much rent you’ll agree to pay to the seller.

A lot of valuable information is calculated for you in the worksheet before you make an offer to the seller. By the time you finish the worksheet, two important pieces of information will pop-out for you. One is the suggested sale price to the buyer. The other is the suggested monthly rent… and plenty of other useful information to make your negotiations both profitable along with a winning solution for everyone involved.

Your profit numbers become much clearer as soon as the worksheet is completed – before you make an offer when buying real estate with lease options directly from the seller!

Whether selling or buying real estate on lease options, here is where you’ll find the answers to your questions – and answers to questions that you haven’t yet thought to ask:

1. Investing In Real Estate with Lease Options.
2. Advanced strategies for Buying and Selling with Lease Options.
3. Your Wealth Building Arsenal.
4. Add Personalized Coaching.
5. Cooperative Lease Options.
6. Expand to Get the Deed “Subject To.”
7. Round it all out by Working with Realtors.

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.

If you found this information useful, please visit again soon at wendypatton.com.

For more exclusive content, please subscribe to my RSS Feed and YouTube Channel.

What did you think of this article? Please leave a comment below.

Life has mostly been a bowl of cherries ever since I got into sandwich lease options several decades ago. I hope you are finding similar success today and are sharing your bowl of cherries with everyone you know!

The seller must win, the investor in the middle must win, and the tenant/buyer must win.

When everyone wins, the result becomes three bowls of cherries to be shared with even more people – there is nothing better!

Today, I want to share a couple of success stories my students have had with sandwich lease options. These were completed by different investors in different parts of the country. The sellers’ and buyers’ names have been changed, but the numbers and details reflect the specific transactions. These deals will inspire and show you how you too can be successful by creating unique solutions for motivated sellers and grateful buyers.

Frank’s First Sandwich Lease Option Deal

Let’s start at the beginning with a student’s first sandwich lease option deal. It’s always inspiring when a student’s first deal comes away as such a strong win-win-win for everyone. Here is how Frank described it.

“Sara had a house in Fowlerville that she kept after her divorce. She couldn’t stand to continue living with the memories from the marriage, so she bought another house in Fenton, closer to where she works. She had the house “For Sale by Owner” and “For Rent.” She wasn’t excited about being a landlord, but she was looking for debt relief in a quick way. I called on her “For Rent” ad and we met to discuss some options. I agreed to start paying her $1,100 per month immediately (because that is what she needed to cover her expenses) and for $1,000 I bought an option to buy at $155,000 sometime within the next three years. I put about $300 into the house to fix a few things, plus a home inspection and title search, so my costs were minimal; around $500.

Two days after I signed with the Sara (the owner), a tenant/buyer from my accumulated list paid me an option fee of $5,000 and the first month’s rent of $1,195 to move in. The lease term was 18 months and the buy-out was $169,900. There is no lease money being applied to the purchase price. The lease started several months ago and they have been paying every single month early. They have never called me with an issue of any kind, so it is going about as smoothly as I could ever hope. I liked this deal because the owner was very happy that I took the house off of her hands, and she always receives rent from me by the first of the month. The tenant/buyers were very happy because they were able to get themselves and their 3 children from an apartment into a nice house on an acre of land. This is a “win” for me also because I made money on the front end with the option fee of $5,000 plus $95.00 monthly cash flow, and the whole deal will make over $16,000. Not bad for my first deal!”

~ F. Purdue -Michigan

Frank’s is a great story showing how you too will be successful by creating unique solutions for motivated sellers that also make your buyers happy.

Shannon Works Well With Realtors

This outcome actually has four winners when you count the agent. I’m telling you, there are a lot of great stories from students and this is only one of them. I only wish I could share more student success stories that come from sandwich lease options. Here’s how Shannon’s story started.

Shannon received a call from a realtor that she had spoken to over a year earlier. The realtor had kept Shannon’s card. This particular house had been listed for six months without luck. The seller had moved out of state, leaving the home empty for the last four months. Shannon was able to lock in very flexible terms to create a terrific deal for her while relieving the seller of his burden and allowing a new buyer a fresh start. The rest is in her own words:

“This deal came as a referral from one of the realtors that I talked to OVER A YEAR AGO!!! She called me out of the blue from my card that she had kept. Here are the numbers:

$700 per month -Lease option price from seller

$850 per month –Lease option price to buyer

$150 per month –profit

$132,000 Purchase price from seller (for as long as I want… I can buy this house for this price in a month or in ten years; he didn’t care either way)

$159,000 Sales Price to buyer within 24 months

I also got a $7,000 option fee from the lady up front.

Not a bad deal, huh? This is almost a $30,000 deal. The great thing about it is that the buyer has pretty decent credit. She could qualify for a loan on this property right now if she wanted to, but is going to wait about a year to get her score up from a previous divorce (her husband had a few late pays). Not only that, but if she doesn’t pay me, it’s no big deal. I’ll just do this whole thing all over again. I also negotiated with the seller that if for any reason I have a tenant that stops paying me that I don’t have to make payments until I get another tenant in the property.

This property was listed on the MLS for 6 months at $155K with no luck. The fact that I offered it on a lease option and had a pretty good marketing plan allowed me to get MORE than a realtor could get. (The house was in great overall condition, it was just a little bit outdated compared to the rest of the neighborhood.) The seller had moved to Texas and it was sitting empty for 4 of those 6 months, so he was obviously motivated. Thanks for showing me the ropes on this one Wendy! I love it!”

~ Shannon McLeay, Missouri

Shannon’s story shows the value of establishing relationships with Realtors.

Those are merely two of the hundreds and thousands of successful student sandwich lease option stories out there. It’s a proven road to Financial Freedom and a Wealthy Retirement.

Wendy’s Ethics Rule

Don’t do sandwich lease options if you don’t intend to follow through on the transaction. Do what you say you will do and when you say you will do it. Help keep real estate investing an honest profession.

You can start writing your sandwich lease option success story right NOW!

1. Investing In Real Estate with Lease Options.
2. Advanced strategies for Buying and Selling with Lease Options.
3. You’re Wealth Building Arsenal.
4. Add Personalized Coaching.
5. Cooperative Lease Options.
6. Expand to Get the Deed “Subject To.”
7. Round it all out by Working with Realtors.

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.

If you found this information useful, please visit again soon at wendypatton.com.

For more exclusive content, please subscribe to my RSS Feed and YouTube Channel.

What did you think of this article? Please leave a comment below.

As I say time and again, sandwich lease options are all about a win-win-win for everyone – the seller, the buyer, and

you as the investor. But make no mistake about it; you are in this to make a profit! As we know very well, there are three paydays. 1. The sandwich lease option fee in the beginning. 2. The rent spread that you collect each month until the sale closes. 3. Your portion of the final sale price.

Almost always, the biggest profit in the financial transaction comes in payday 3 (at the end of the deal) when a bank approves a 30-year mortgage for the purchase price (less the down payment). The mortgage amount typically ranges from $100K to several hundred thousand dollars. There’s a lot of money involved, so you really want to get this part perfect. That’s why the course materials include a Profitability Worksheet covering all three of the paydays, along with all the forms, contracts, instructions, guides, and other materials you need to complete every step of the sandwich lease option transaction.

The course materials cover both a sandwich lease option and if you are selling a house on a lease option that you already own!

Calculating What Goes Into Your Profit

The Profitability Worksheet is very simple and fully automated to make the calculations you need based on the data you provide for your specific sandwich lease option. It’s color-coded for you to put your information into the green spaces and the completed calculations appear in the blue spaces.

Use the automated profitability worksheet to run your own examples. This enables you to determine which deals are value-added to get into, as well as how to best structure individual deals.

It begins with the basics that include the current market value of the house and the option sale price that you agree to with the seller (remember, you’re not paying the option price until all of the mortgage money is on the closing table). The market and option sale prices are used to calculate the purchase option fee you’ll charge the tenant/buyer. You can run any option fee scenario that you want to – such as 3%, 5%, or 10% of the tenant/buyer’s purchase price. The profitability worksheet also calculates the estimated future appreciation based on the number of months in the lease.

The data is used to calculate the suggested sales price for the tenant/buyer.

Another portion of the sandwich lease option profitability worksheet calculates how the monthly rent money flows to you and the seller. By running different scenarios, you’ll learn your potential cash flow from the rent spread. There is also a section on rent credits if you decide to use these. It includes both rent credits the seller gives to you and rent credits you might give to the tenant/buyer (not recommended). Yet another section of the worksheet enables you to analyze different ways the option fee might be applied – such as part of it going to a real estate agent. Everything you have learned about creative financing using sandwich lease options is in the worksheet.

Of course, there is a line showing your total potential profit from the deal and what will be paid to the seller.

The example for an $80,000 house shows your profit at $29,710 and $21,600 in rent paid to the seller.

But that is just a typical example. Your bottom line depends on your local market and the specific house that you put on a sandwich lease option.

Everything Else Comes with the Course

The checklist becomes your guide throughout the process of selling on a lease option. It covers everything from advertising for a buyer to what to do if the tenant only makes a partial rent payment during the option period. It’s all backed up with fill-in-the-blank forms and contracts that have been approved by an attorney. The forms can be used in all states but as with any real estate contract, you should have these reviewed by a real estate attorney in your state. The instructions are so detailed that they include how to take the master forms and contracts that come with the course and turn them into your own master forms (I covered this in a previous blog about the cooperative lease option).

The details are in the paperwork. For instance, a standard rental application is not appropriate for a sandwich lease option. After all, you’re looking for a tenant/buyer that can qualify for a mortgage in a few months. You need to know more about the person’s work and income history in addition to the standard landlord references.

As another example, a sample letter for the tenant/buyer to begin credit repair is included. This is truly a detailed course. As you already know, the tenant/buyer becomes responsible for the maintenance of the house they will be purchasing. A sample letter reminding them about the required maintenance is included.

More sandwich lease option materials included:

1. Criteria for lease option applicants.
2. Option to purchase agreement.
3. Property inventory.
4. Tenant/buyer ledger.
5. Letter for late tenant payment.
6. Much more.

Of course, we don’t live in a perfect world. It is possible for something to go wrong even with a well-thought-out and well-executed sandwich lease option. There are materials for these scenarios too. There’s a sample letter explaining that you’ll be showing the house to other prospective buyers if the current tenant is not paying as required. There’s even a letter for denying an applicant when they just don’t qualify for a sandwich lease option.

Everything you need to be successful is here. There are advertising scripts and telephone scripts for qualifying a buyer before you meet them or go to the trouble of showing the house.

It all starts with the Profitability Worksheet that you use to run multiple scenarios before placing a house on a sandwich lease option and before filling in the blanks on the easy to use forms and contracts.

Now is your time to immediately take wealth-building action:

1. Cooperative Lease Options.
2. Investing In Real Estate with Lease Options.
3. Advanced strategies for Buying and Selling with Lease Options.
4. Your Wealth Building Arsenal.
5. Add Personalized Coaching.
6. Expand to Get the Deed “Subject To.”
7. Round it all out by Working with Realtors.

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.

If you found this information useful, please visit again soon at wendypatton.com.

For more exclusive content, please subscribe to my RSS Feed and YouTube Channel.

What did you think of this article? Please leave a comment below.

As soon as you harness the power of Cooperative Lease Options, you’ll be on your way to making a 5-figure deposit into your bank account within a month or less. While it’s true that you’ll make more money with a sandwich lease option, nothing beats the cooperative lease option for a fast payday and getting started in the lease option business.

There are many reasons to go with a cooperative lease option. You know I prefer no-cost/low-cost deals with almost no risk and that is exactly what these are. In fact, these even stay away from one of the remaining small risks associated with sandwich lease options. That’s the very small risk that the tenant/buyer won’t complete the purchase. The cooperative lease option is about you bringing together the seller and tenant/buyer and then stepping out of the deal. If the tenant/buyer doesn’t complete the purchase, you are already out of the deal with no remaining risk, although you might provide your knowledge to find a way so the sale can go to the closing table.

And…

…. there are more powerful reasons why you want to have Cooperative Lease Options in your toolbox….

When a Cooperative Lease Option is Right for You

Here are more (of many) reasons why a cooperative lease option can be the right tool for the right deal.

1. When you (the investor) are just getting started and could use a quick deal generating fast cash.
2. When you have several sandwich lease options under contract generating monthly rental income (say $300 per house, per month) but it will be a few months before a tenant/buyer closes a purchase to generate a bigger payday for you.
3. You have a possible deal that will generate a decent lease option fee for you but there really isn’t much equity (big payday) for you to earn by holding the rental contract for a few years.

A Cooperative Lease Option works well when the seller doesn’t leave much meat on the bone for you (the investor) to stay in a sandwich lease option for two or three years.

How Easy and Simple a Cooperative Lease Option is Made for You

The course comes with every master contract that you will need. A trick I encourage students to use is converting the master contracts that I provide into your own custom master contracts that you use again and again to save you time and work on every cooperative lease option deal.

It’s as simple as creating a master contract folder on your computer where you fill out the contracts that come with the course with your own individual information. Typically this includes your own name, the name of your LLC, your state, and your county. You fill this in once on your own masters and keep the masters separate from the contracts you fill out for each unique deal.

After that, each time you have a cooperative lease option deal, you only need to fill in the specifics for that deal. Those are things like the date, the seller’s name, the address of the property, and of course the dollar amount. Quick and easy… it can even be done while you are meeting with the seller or tenant/buyer.

Your custom master contracts speed up an already fast to-do deal!

What Else is On the Cooperative Lease Option Checklist?

From your master contract folder, you make a copy of the checklist that goes into a new folder set up specifically for the property you are writing a deal for. (Tip: I typically title the folder as the address of the property.) You want to start with the checklist because it generally lists the tasks in the sequence that you want to complete them. There might be minor changes in the sequencing for a specific deal but the checklist provides a very useful guide through the entire process.

Here are a few highlights from the process:

At the top of the checklist, type in the house address so that you always know which deal this checklist applies to.

Make a proposal to the seller. (Optional – many times it’s verbal).

Check if the mortgage is up to date.

Get a key or access to the home to show it to prospects.

Advertise the home. (See script to screen tenant/buyers.)

Tenant/buyer fills out the rental application and puts down a non-refundable deposit. (See forms.)

Verify application and run credit.

Have tenant/buyer sign all documents with seller.

Collect option fee from tenant/buyer at the time of signing documents or before.

That isn’t the entire process for cooperative lease options but it gives you an idea about how the easy to follow sequence goes.

Of course, there are customizable contracts throughout the entire process.

How to Structure Cooperative Lease Options

From beginning to end, the process is actually quite simple. This is nothing more than creative investing that most people just don’t think of. First, you use one of the many methods I share to find a seller in a bit of a pickle who needs some help with this type of creative selling.

Then you explain in a general way how a lease with an option to purchase works. What’s important here is that you gain some control over the property. You do this by signing a purchase option agreement between you and the seller for some “consideration.” When it comes to a cooperative lease option, you want the option fee you pay the seller to be very small. You probably want to start negotiating for as little as $1 to $10. This is important because your money comes from a much higher option fee that you collect from the tenant/buyer. If you pay too much to the seller, the tenant/buyer fee will only be reimbursing you rather than earning you a decent fee in exchange for your services and knowledge of how to put the deal together.

The purchase price you have under contract in a cooperative lease option is the same price you offer the tenant/buyer. What you want from the tenant/buyer is the full “traditional” option fee. A traditional option fee is between 2% and 5% of the purchase price. At 3% on a $200,000 purchase price, the option fee you collect is $6,000. Once you collect the traditional option fee, you “flip” your purchase option agreement (you paid $1) to the tenant/buyer. At this point, you step out of the deal.

It becomes the responsibility of the seller and the buyer to close the deal at some future date before the option period expires.

What’s great about creative investing is that there are variations to fit every situation.

The cooperative lease option is only one tool in your toolbox.

1. Investing In Real Estate with Lease Options.
2. Advanced strategies for Buying and Selling with Lease Options.
3. Your Wealth Building Arsenal.
4. Add Personalized Coaching.
5. Cooperative Lease Options.
6. Expand to Get the Deed “Subject To.”
7. Round it all out by Working with Realtors.

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.

If you found this information useful, please visit again soon at wendypatton.com.

For more exclusive content, please subscribe to my RSS Feed and YouTube Channel.

What did you think of this article? Please leave a comment below.