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.
…. 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.
- When you (the investor) are just getting started and could use a quick deal generating fast cash.
- 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.
- 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.
- Investing In Real Estate with Lease Options.
- Advanced strategies for Buying and Selling with Lease Options.
- Your Wealth Building Arsenal.
- Add Personalized Coaching.
- Cooperative Lease Options.
- Expand to Get the Deed “Subject To.”
- 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.
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