How many rental properties do YOU dream of owning? It’s a trick question. Most investors are saying, “As many as possible!” Your answer should be, “Zero.”
Why even read on? Because there’s money to be made, and the magic is in controlling — not owning — as many properties as possible. So, what’s the difference between owning and controlling property? Check out below to learn more, including the top five reasons why controlling properties through lease options and sandwich lease options is the best way to earn money in real estate investing.
#1. Owning Multiple Properties Leaves You Wanting More
Most investors think it’s counterintuitive that controlling property gives you a financial upper hand over owning, but I’m going to break it down for you.
Dave is an experienced investor. He’s got 20 rental properties valued well over $1,000,000. Cash for most investors is limited, so to invest in more properties, Dave borrows $15,000 against his current properties to free up some funds. This leveraging puts those properties at risk, not to mention the added debt Dave’s got to repay. With $15,000, Dave qualifies for a mortgage to own a $150,000 rental house. Maybe he can stretch that to two properties, but it’s unlikely that a beginning investor or even Dave himself will end up owning more properties than that.
#2. Lease Options Give You More Bang For Your Buck
Why own if you can profit more by controlling properties through lease options?
Let’s take that same $15,000 that our experienced investor, Dave, is working with. Rather than using those funds as a downpayment on a rental like he did, you’re going to apply that cash to purchase option fees — non-refundable fees, typically set at 1-5% of the purchase price of a property. Let’s say the option fee for that $150,000 rental house is $2000 (1.3% fee). You’ve got enough capital left to control six more properties at the same rate.
#3. Lease Options Continue to Show You the Money
Whether you own or lease the house, you’ll still be pulling in the same amount monthly. When charging $1500 for rent (1% of the purchase value), you’re paying about $675 a month towards the mortgage or rent. This leaves you with added income of $825 a month before taxes, insurance, and maintenance.
#4. Lease Option Investors Are Rolling in ROI
Let’s say Dave, our experienced investor, was able to purchase two rental houses with his $15,000 investment. He’s now pulling in $825 in profits from each of his properties totaling $1650 gross monthly profit per month. Not a bad haul!
You, on the other hand, use your knowledge of lease option strategies and take control of 7 houses with your $15,000 investment. You’re netting $825 for each of your seven properties on a monthly basis, earning you a gross profit of $5775 per month, over $4000 more than our experienced investor, Dave.
But wait, there’s more!
As if your monthly income wasn’t great enough, let’s now look at your return on investment.
The annual gross ROI for Dave the experienced investor is 132%.
12 months x $825 rent profit x 2 houses = $19,800
$19,800 / $15,000 = 132%
The annual gross ROI for you, the lease option investor, is an unbelievable 462%.
12 months x $825 rent x 7 houses = $169,300
$169,300 / $15,000 = 462%
Learn more in my eBook: Investing in Real Estate with Lease Options, now including one free month membership in my Inner Circle.
#5. Level Up Your Investment Game with Sandwich Lease Options
Although Dave the experienced owner is gaining appreciation on his properties that you won’t as an option investor, it’s going to take years for the appreciation to catch up to the difference in ROI between the two of you. You’re pulling in more profits over the next few years and moving on to repeat the deal long before the appreciation catches up.
Let’s say you put an end buyer, Sheila, in place to pay the rent until the purchase is complete. Sheila pays YOU a lease option fee that reimburses your original $2000 cost.
When your investment becomes $0, your ROI becomes infinite.
You’ve got another payday coming your way when your end buyer, Sheila, completes the purchase. You’re selling to Sheila for $10,000 more than you owe the original owner.
What do you think?
Let’s review. This sandwich lease option deal begins with an initial $15,000 investment that’s returned almost immediately, pulls in a gross rent profit larger than what’s possible as an owner, and generates a sales profit greater than the appreciated value that an owner receives. All these perks without the risks and responsibilities of ownership.
It’s no argument. The pros of lease option strategies outweigh those of owning multiple properties, hands down.
Learn about my Sandwich Lease Option Business in a Box packed with all tips, tools, and training you need to buy and sell properties using lease option strategies.
For more than 30 years, I’ve used the Sandwich Lease Option System to earn millions of dollars. I know there is plenty of opportunity in real estate investing for everyone. I want to see you be successful. That is why I am sharing my Sandwich Lease Option System with you.
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