FEAR – False Evidence Appearing Real. I’ve met hundreds of investors that are stuck – they want to do deals but aren’t. These people are having a tough time overcoming the fear of real estate investing. Sometimes they have been stuck for years and years! When I ask what’s holding them back the answer is almost always because they can’t find good deals in their area or that prices are too high to get started. When I ask why they say that a common answer is that news headlines are screaming that real estate prices keep going up at a historic pace.
DUH! People are getting rich every day in real estate because it keeps increasing in value. That is one version of False Evidence Appearing Real.
Billionaire Andrew Carnegie famously said that 90% of millionaires got their wealth by investing in real estate.
Real estate investing success is happening all around you. You see it on TV. You hear about it on coffee breaks at work. Your parents have been homeowners for as long as you can remember. Maybe your cousin even made a decent chunk of change flipping an inherited rental left to her by her mother.
So why do you have an unnatural fear of real estate investing? And more importantly, what’s the first step to overcoming the fear of real estate investing?
Control Without Ownership Using Lease Options Drastically Reduces Fear and Risk
Control Without Ownership Using Cooperative Lease Options
Cooperative lease options and sandwich lease options are the most effective ways of overcoming the fear of real estate investing. When most people think about the cost of real estate, their first thought is a bank mortgage. Mortgages are very inferior to lease options. Mortgages come in different flavors (e.g., recourse and nonrecourse loans), but all require the loan to be repaid in addition to all the expenses and fees that must be paid – even if something goes wrong. If you own it and something goes wrong, your credit is destroyed along with being saddled with a pile of late charges, fees, and more fees. Tons of risks and tons of costs. All of which are easily avoided when you control property without ownership using lease options.
Lease options are hugely different and much more profitable without the risks and costs of loans. The big leverage is having the OPTION TO PROFIT without the obligation to purchase. Although you want to make financially sound deals, having an option allows for more risk without financial penalty.
Control without ownership using lease options overcomes the #1 fear that most investors have. The fear of becoming financially responsible for a house with a 30-year mortgage. That’s a lot of financial risk without assurance of a fair and reasonable profit.
Every one of the lease option methods cuts that 30-year risk down dramatically with the cooperative lease option being the least risky. I’ve seen investors make a profit and be out of a cooperative lease option in a couple of weeks. How is that for cutting a 30-year mortgage risk down to size?
A cooperative lease option involves flipping, or wholesaling, lease options for quick cash.
Sandwich Lease Options for a Little More Risk and a Lot More Profit
The payoff with a cooperative lease option is less but so is the risk. If overcoming the fear of real estate investing is a struggle, that is probably the place to start. But with a little success, prepare yourself to quickly move up to sandwich lease options. This is still control without ownership and it still cuts that 30-year mortgage risk down to a very reasonable 1 to 2 years. The increased reward is that compared to one profit point with a cooperative lease, the sandwich lease option has 3 profit points. All 3 profit points come without an obligation to complete the purchase unless you are assured of a profit. It’s all upside with the riskiest part being that you are in a highly profitable deal that pays for a longer period of time.
In both lease options, the people you are doing business with like these because you are offering a win-win-win contract. One that enables the seller to start generating cash from the property to cover the mortgage payments and have positive monthly cash flow. You make some money in the middle. And you help a tenant-buyer who has most of the down payment today but needs a little time before he or she can fully qualify for financing.
“Every person who invests in well-selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming independent, for real estate is the basis of wealth.” ~ Theodore Roosevelt, U.S. president
Overcoming the Fear of Real Estate Investing is a Process
Overcoming the fear of real estate investing is about decision-making. It’s about decisions based on facts and data rather than Aunt Gertrude’s cocktail hour conversation about a hunch she has that a neighbor down the block is selling their house at a rock bottom price.
Think for a moment about other times you made a financial decision. Maybe it was a car, Wall Street stocks, or even your college education. You didn’t decide in a vacuum, did you? Proper decision-making is about developing a list of criteria that needs to be met. Then you look for opportunities meeting most or all of that criteria. For a car, it might a hybrid, gas mileage, or safety features. For Wall Street stocks, it might be a history of earnings or future potential. For your college degree, it’s a mix of the right courses, knowledgeable professors, and affordability.
You must develop a reliable framework of criteria specifically related to real estate investing. And here is the framework for overcoming the fear of real estate investing:
- Educate yourself about real estate investing.
- Expert advice from a mentor or coach.
- Perform risk-reward analysis on lease options.
- Conduct due diligence on specific properties.
- Use other people’s money by controlling instead of owning.
- Reap the rewards.
- Enjoy the experience.
I’ve enjoyed my own remarkable success and believe there is plenty to go around for everyone. I have published multiple books and videos helping many others get started in real estate. I also offer courses. Another readily available resource is a local real estate agent who can help you understand the local market.
Lack of experience is a big hurdle to overcoming the fear of real estate investing. You overcome that hurdle by putting together a plan, attending seminars, and using proven resources. Then you have an expert and others with experience review your plan and make suggestions. Next, find a few potential lease option properties. Using your knowledge and plan, run the numbers for each property and have an expert look at what you came up with. There isn’t much more to overcoming the fear of real estate investing.
But you must ACT NOW!
What To Do Now
Your fears are real, but they prevent you from acting. Some fears are healthy but in business, fear can limit your ability to truly be successful. In the pursuit of financial freedom, fear must be faced and overcome. You take control by expanding your knowledge of the risk and reward fundamentals.
And then you take action. With a proven process, the rest all falls in place!
Are there risks? Yes, there certainly are risks. But those risks are much greater when everything remains unknown. The risks greatly increase when you have your own money tied up in a single property.
Sandwich lease options provide maximum diversity by controlling multiple properties while minimizing the risk that comes with ownership of a single investment property.
You will profit and succeed by overcoming the fear of real estate investing with lease purchase options. The bottom line is that the more you learn, the more you earn.
“Now, one thing I tell everyone is learn about real estate. Repeat after me: real estate provides the highest returns, the greatest values, and the least risk.” ~ Armstrong Williams, Entrepreneur
Fear comes from a lack of knowledge. Your best remedy for fear is to gain knowledge!!
- Cooperative Lease Options.
- Buying and Selling with Lease Options.
- Your Wealth Building Arsenal.
- Working with Realtors.
- Investing In Real Estate with Lease Options.
- Personalized Coaching.
- Get the Deed “Subject To.”
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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