Lease Option Coaching FAQ

When it comes to lease option coaching FAQ the sellers and end buyers have different concerns. You, as the principle (investor) in the deal not only have your own questions but also need to be able to answer the questions for your sellers and buyers. These FAQ should be of interest to everyone (investors, sellers, and buyers).

Lease Option FAQ for Sellers

Q: Why would I choose to do a lease option instead of outright selling the house for cash?

 

A: That depends on your circumstances but this definitely offers you (as the seller) more options. First, while the national market is currently a seller’s market, it isn’t that way everywhere. If yours is a slower market, the lease option opens your market to many more potential buyers. Same thing if your market is highly active. Another good reason is some sellers would like to collect a monthly rent for a year or more and still have a highly motivated buyer in the not too distant future. If you would like to discuss your particular circumstances, please contact my staff or myself at wendypatton.com/contact/.

 

Q: The lease option seems like a complicated process. Where do I start?

 

A: Start by deciding the terms you want to offer the buyer. Decide how long you want the purchase option to be available. Most common is 18 months to 2 years but it can be longer. Then decide how much to charge for a nonrefundable purchase option fee. Typically, it’s between 1% and 3% of the purchase price. Check your local market to see if a standard exists. You also want to begin considering what maintenance responsibilities you want the tenant to assume that go beyond a traditional lease.

 

Q: What’s the next step in a lease option?

 

A: As the seller, you have several options to consider. Even before you have a buyer interested in the lease option, you should create a draft of the purchase option agreement. You want a win-win agreement, which means the buyer will have some say in the final contract. However, a draft will go a long way towards helping the buyer understand how the process works. I always recommend that you have a real estate attorney knowledgeable in lease options review your contracts. This is particularly important with your first several deals and after any change in regulations.

 

For investors, I encourage you to take full advantage of these additional lease option coaching FAQ and personal lease option coaching as well as the additional resources I’ve included at the end of this article.

Lease Option FAQ for Buyers

Q: Finding a lease option purchase home seems difficult, where do I start?

 

A: Finding a lease option purchase starts with a search for available houses. Begin your search by asking a real estate agent to review the MLS. Also, look at your local craigslist and other local periodic publications with a real estate section. You can also find any house for sale to make a lease option purchase offer.

 

Q: When deciding to accept a lease option purchase agreement, how do I know if I’m getting a fair deal?

 

A: You should always have a real estate attorney review any contract before signing. Just as importantly, you can counter offer any lease option purchase agreement to include terms that you prefer. The lease option purchase agreement is a very flexible contract that should be written to suit both the buyer and the seller.

 

Q: What is my biggest risk?

 

A: Qualifying for a loan to complete the purchase is the biggest difficulty most buyers face with a lease purchase agreement. Carefully consider if it’s reasonably possible for you to fix your credit rating and come up with the down payment within the option time period. If not, ask for more time. Also, a lease option agreement can include a provision to automatically extend the option period if agreed credit improvement is being made. Credit counseling is another option.

 

These lease option coaching FAQ demonstrate the many possibilities for investors, buyers, and sellers willing to think outside the box. These are only a few of the many possible questions you may have. To learn more, you’ll want to read this other useful information that I offer to you free. Please take advantage of it today.

 

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.

How to Find Rent to Own Properties

Based on my decades of real estate investing experience, I’m firmly convinced that lease options are the least risky but highly profitable niche for investors. Something else I’ve come to firmly believe is that you and I can learn for each other to stay on the cutting edge of the ever-evolving real estate market. Learning how to find rent to own properties is the cornerstone of the lease option investing business. This article is only the tip of the iceberg of information I share with readers at wendypatton.com.

Whom is lease option investing suited for? Well, any investor. However, beginning investors that are cash poor find it particularly appealing. As does the experienced investor that has maxed out his or her ability to obtain new financing. Also, every investor in between.

Step 1 – How to Find Rent to Own Properties

As soon as you have a nuts and bolts understanding of lease option investing, your first action is finding investment properties with a high profit potential as a lease to own. Notice that I said “investment properties”. I specifically didn’t say find properties “own” or “buy”. Real estate investing is about “controlling” as many properties as you can. It is NOT about “owning” as many properties as you can. This is why the sandwich lease option is ideal.

 

The key wisdom of how to find rent to own properties means taking control of a house with a lease option. You don’t own it, no one can sue you for it, no one can put a lien against it, this is low risk investing. You pay a small “option fee” for control rather than a hefty down payment. That makes it low cost. What you are looking for is a low risk/low cost investment property.

Once you control the property, you find an end buyer wanting a lease to own purchase arrangement. The sandwich lease option puts you in the middle as the meat in the sandwich. The meat is the best part where you can profit three times. You charge a higher lease option fee. You charge a higher rent from the end buyer than you pay to the seller. And you charge a higher sales price from the end buyer than you pay based on the original lease option. Those are the nuts and bolts of how to find rent to own properties.

How to Find Rent to Own Properties – Targeting Prospective Sellers

You are not in the same real estate market as other investors or first time buyers. There are plenty of lease option sellers out there when you know who to target. Among the many opportunities, your best includes people that are willing to both sell a house and/or rent it out. These are people needing to quickly generate cash from the property they own. A lease option generates instant cash for them in the form of the option fee as soon as they sign the agreement. You can even hand them cold cash right at that moment. It then pays a passive income to them in the form of your monthly rent check.

 

 

 

One of the strong benefits of the sandwich lease options is the ability to write flexible agreements that meet everyone’s needs. Win-win-win scenarios when the seller, you as the investor, and the end buyer all come away with what you want. How to find rent to own properties often involves another highly likely prospect – the tired or retiring landlord. These are people that no longer want to manage their rental property. What you are offering these people is the same quick cash with the option fee, a passive monthly retirement income, and a retirement nest egg when the end buyer completes the purchase.

At its most basic, finding rent to own properties is about finding a house owner that answers “Yes” to these two questions:

 

  1. “Are you interested in renting your property on a long term lease for between 2 to 4 years?”
  2. “Are you be interested in selling the property to me at some point during the same 2 to 4 years?”

 

Real estate investing does not need to be about owning as much property as possible. It should be about controlling as much property as possible for the least amount of money and risk. That makes the Sandwich Lease Option the most attractive investing method I know of. You can take control of the property for a couple of hundred dollars.

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.

How to Find Rent to Own Properties

I know lease options are less risky and more profitable than many alternatives. Especially, for new investors. I believe that you and I can learn from each other. To stay on the cutting edge of the ever-evolving real RentToOwnestate market. Finding rent to own properties is critical to your success.

Whom is lease option investing suited for?

Well, any investor. Yet, beginning investors that are cash poor find it particularly appealing. As does the experienced investor that has maxed out his or her ability to get new financing. Also, every investor between.

Step 1 – How to Find Rent to Own Properties

First, understand the nuts and bolts of lease option investing. Your find investment properties with a high profit potential as a lease to own. Notice that I said “investment properties”. I didn’t say find properties “own” or “buy”. Real estate investing is about “controlling” as many properties as you can. It is NOT about “owning” as many properties as you can. This is why the sandwich lease option is ideal.

The key wisdom of how to find rent to own properties means taking control of a house with a lease option. You don’t own it, no one can sue you for it, no one can put a lien against it, this is low risk investing. You pay a small “option fee” for control rather than a hefty down payment. That makes it low cost. What you are looking for is a low risk/low cost investment property.

Once you control the property, you find an end buyer wanting a lease to own arrangement. The sandwich lease option puts you in the middle as the meat in the sandwich. The meat is the best part where you can profit three times. You charge a higher lease option fee. You charge a higher rent from the end buyer than you pay to the seller. And you charge a higher sales price from the end buyer than you pay based on the original lease option. Those are the nuts and bolts of how to find rent to own properties.

How to Find Rent to Own Properties – Targeting Prospective Sellers

You are not in the same real estate market as other investors or first time buyers. There are plenty of lease option sellers out there when you know who to target. Among the many opportunities, your best includes people that are willing to both sell a house and/or rent it out. These are people needing to generate cash from the property they own. A lease option generates instant cash for them in the form of the option fee as soon as they sign the agreement. You can even hand them cold cash right at that moment. It then pays a passive income to them in the form of your monthly rent check.

Sandwich lease options allow you to write flexible agreements, tailored to the deal.

Win-win-win scenarios when the seller, you as the investor, and the end buyer all come away with what you want.  How to find rent to own properties involves another likely prospect. The tired or retiring landlord.

These are people that no longer want to manage their rental property. You’re offering, quick cash with the option fee. A passive monthly retirement income, and a retirement nest egg, when the end buyer closes.

Finding rent to own properties is about…

Getting a homeowner that answers “Yes” to these two questions:

  1. “Are you interested in renting your property on a long term lease for between 2 to 4 years?”
  1. “Are you interested in selling the property to me at some point during the same 2 to 4 years?”

Real estate investing does not need to be about owning as much property as possible. It should be about controlling as much property as possible for the least amount of money and risk. That makes the Sandwich Lease Option the most attractive investing method I know of. You can take control of the property for a couple of hundred dollars.

By Wendy Patton

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.

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.

Details Behind Starting an LLC for Your Real Estate Business – Part 1

I thought it might be useful to put together a detailed post on some of the tangible benefits of starting a company for your real estate business and what the process looks like.

As you know, I am a business owner myself. In fact, I own several companies; an insurance company, a title company, a real estate management company, Keller Williams offices and more. Needless to say, I’ve started a few companies and would like to share with you what I’ve learned about setting them up.

It used to be that starting a company was an arduous task. One that required you to hire a lawyer most times and for the most part the process just took longer and cost more. Thankfully, times have changed somewhat in this regard. You can (and sometimes should) still hire a lawyer, but today, that is not always necessary to start your real estate business properly. In the age of information, you can quickly set up an LLC using online services such as MyCorporation to setup an LLC FREE.

Before we continue, I must first give you a quick disclaimer: I’m not a lawyer or a certified public accountant of any kind. Nothing I say or write should be held against me or my companies, and this information shouldn’t be taken as legal advice. If you’re looking for professional advice, I recommend consulting with a lawyer or CPA on your own.

Thank you!

 

Why Would You Want To Start Your Own Company At All?

I’m glad you asked!

 

There are of course many reasons why someone would want to start their own business or setup an LLC. Some of the most common reasons are: Legitimacy, Liability Control, Fulfilling a Lifelong Dream or Passion to start your very own business. For me, it was always a goal, a motivator for action, to have my own business. I knew that there would be a ton of responsibility (more than I imagined), but I also knew at a certain point, if I stuck with it, there would be more control and freedom (much more than I ever imagined).

Further reasons why someone may want to start a company:

  • Taxes: One of the very best things about starting a company, for many people, is that you can now start writing things off! Woohoo! To figure out what and how aggressively you can write-off business expenses, I recommend at least meeting with a CPA/Accountant to get an idea of what the rules are.
  • Personal Liability: In most cases, forming a company or LLC provides you with insulation from liability when it comes to your personal assets. For example say a company goes bankrupt or gets sued, the companies assets are separate from the owner’s personal assets if they have setup their company correctly, and the liabilities fall on the business assets (not your personal checking account).
  • Image: This one works both ways. It shows others you are a legitimate business that has registered with the proper authorities and more people are likely to feel comfortable working with you. On the other hand, it also gives many first-time business owners a sense of personal satisfaction and makes what they are doing feel that much more professional.
  • Personal Independence: This is the most common reason people start a business. They want to break out of the 9-5 grind. By starting a business you take full responsibility for your success and failure, and are one step closer to true independence. For some, that is freedom to do what they want, or it could be incentive to work 24/7 because they know the benefit flows to them, or it could be anything that brings you a sense of freedom and independence.

 

Why You May NOT Want to Start Your Own Business or LLC

I’m always striving to keep things balanced. So here is a look at the flip-side of the coin.

 

Do you have what it takes? Be honest with yourself. Starting a business is like learning to swim by nearly drowning. There are many highs and lows, the path is not linear or smooth. There is a chance you will fail. In fact, there is a guarantee that you will fail. Do you have the tenacity to fail forward? Or are you easily discouraged by setbacks? Maybe you are comfortable in your job and a change really isn’t that important to you.

Here are some things to consider:

  • You’re on Your OWN: The only person that can make this thing work is, you guessed it, YOU! That can be a daunting thought, especially when you start thinking about the future and the whole process your business has to take to become successful. A lot of people stop right here or never get past this sticking point. Think about it this way. At your job you have that one job to do (granted there may be many different tasks), when you’re the boss that also, most times, means you’re the accountant, janitor, and CEO; at least when you’re starting. In the beginning, you will have a hand in everything and may even be responsible for everything. That can be a lot to take in!
  • 9-5, what’s that?: You don’t have a schedule anymore. This thing called your business will be your life. That’s what it takes. You will not be home by 5PM every day. You will not work 5 days a week, 8 hours a day. You will work and work and work. Keeping steady hours is a real challenge because there is always so much you can be improving on every day!
  • Employer Incentives and Benefits: You won’t, at least in the beginning, have any of the benefits you may take for granted at your current job. Retirement accounts, 401K matching, health insurance etc. those are now your responsibilities. This can be a VERY challenging transition. Having a game plan, or stabilization fund can make the difference here.

Even with all that potentially “bad” stuff, I do not regret, for a minute, starting my own business. I am thrilled with the journey I am on and being a small business owner has given me more than I expected, both in stress and joy! However, you WILL get to a point if you keep at it, where things start falling together and you realize it was all worth the effort. I never stop, because the enjoyment is in the creation, in the excitement of starting something new that you’re going to pour your energy into. It’s hard to beat being an entrepreneur, you just might have to go through hell to get there.

If you’re still ready, willing and able then please continue reading along…

 

Business Structures: Types

When you’re starting a business you’ll need to figure out what kind of legal setup you are going to use and how you are going to structure that setup. Below is a quick overview of each business structure but you can also check out the Internal Revenue Service’s Website (which has a ton of good info).

 

Corporation:

For all intents and purposes, a corporation is a business structure that is treated as a separate legal entity from its owners. A corportation, ironically, is like its own person, with its own bank accounts and liabilities. These are typically more arduous to setup and are often time-consuming. Usually, you’ll go this route if there are shareholders, a board of directors and a staff etc. Typically, if this is your first business a corportation is not likely to be what you want.

The main advantage of a corporation is the release of liability as they relate to personal assets. There are amny diffrent types of corporations that you can setup, but that is beyond the purveiw of this post. One additional thing, that I think is important to mention, is that since Corporations are a separate legal entity they are taxed as such. This can get complicated in a hurry! Maybe a little too complicated if you’re just starting out.

 

Sole Proprietorship

A sole proprietorship, is like the name implies, a business structure owned by an individual. This is the most straightforward business structure to setup. It is also not without risk. All you need to do to start is to register your business with a DBA (doing business as).

Major downsides! You, as the business owner, are personally liable for and debts, suits, or problems your business incurs. Also, as a sole prop, you will find it VERY difficult to qualify for funding or get a bank to take you seriously. Income and expenses are on an individual personal return. ( the same thing goes for a GP below)

 

Partnership (General):

A GP (general partnership) is really similar to a sole proprietorship, except it has two or more people involved in the business. There is more upfront work gere than with a sole proprietorship becuse you’ll need to figure out a division of responsibilities, ownership levels and percentages, and any other odds and ends that pertain to the people involved in the business.

Danger ahead! You have all the same liability problems as with a sole proprietorship, but they are also compunded by the fact that you are also likely to be held responsible for any of your partners missteps! That can be a pretty big deal! Don’t beleive me, just google “business partnership nightmares”, and you’ll get an idea of how this can unfold. I avoid any sort of arrangment, when possible, that exposes my personal assets to liability.

 

Limited LIABILITY Company – LLC:

Like the name implies, your liability is limited. Since LLC’s are relatively new as business structures go, let’s take a closer look. First things first! Here’s why these are a useful structure, your LLC gives you similar protection to a corporation with much less fuss to setup. An LLC can also elect to be taxed many different ways. Some ways include: as a Sole Proprietorship, Partnership and as Different Types of Corportations. Also, your business operating costs and profits can be “passed through” to an individual tax return. (which makes things pretty simple).

Most of the companies I have setup have been LLC’s because of their protection of personal assets against business liabilities. They are, however, not without perceived weaknesses and downsides. Nothing is perfect, right?

 

Food For Though When it Comes to LLC’s:

  • Some states treat LLC’s different than others. Be sure you know how your state treats them! If they treat them more like a sole proprietorship you may want to explore other options. For me, I ALWAYS focus on insulating my personal assets from my business assets. You don’t want to lose the house if things don’t go your way and depending on how your LLC is viewed by the state in which you are doing business, you very well could. I use LLC’s to limit my personal liability and if that benefit is not there, well that kind of defeats the purpose. Make sure to check into this or speak with an attorney about how LLC’s are treated in your state.
  • The Tax Man Cometh! Some states require what is referred to as a franchise tax that you must pay in order to maintain or have an LLC. You can think of this as a “pay to play” type scenario. Many states have this fee and it is important to consider this before you get started. Can you afford a couple $100 in fees? That could also be a good benchmark to decide if you really are ready to start a business. If a few $100 will wipe you out, then chances are you are not ready.
  • Loans can be hard to come by. If you are thinking you will need traditional funding from a bank then you may want to consider your options. The liability aspect goes both ways. If your business account has $5 in it and no real assets for collaterall, there isn’t much for the bank to collect on if things go sideways. Just something to consider. LLC’s can be more challenging when you are trying to raise traditional capital.

 

I let time get away from me on this one!  I’ll be back next week with the details on setting up an LLC!

Are you thinking about starting your own business? I know many of you have already! For those who have, what was your experience, have any advice for our members? What was your outcome? Are you happy with it? Let me know in the comments or shoot me an email at info@wendypatton.com to share your business structure story.

Until Next Time! To Your Success!

Wendy Patton

How to Find a Buyer Now

For new investors, figuring out how to find a buyer now is one of the biggest obstacles to overcome. Especially if you are doing a For Sale by Owner, or want to self-generate a large list of potential buyers ready to move fast when an opportunity presents itself. But don’t become disillusioned. How to find a buyer now is as easy as steadily working on your ever-growing list.

How to Find a Buyer – Think Like a Buyer

When it comes to lead generation in the world today, 96% of homebuyers start their search online. That’s why the biggest players in our industry have such strong online presences. You don’t need to throw a pile of cash into marketing to find buyers. You can start with a DIY approach.

Traditional old school marketing has very little reach and conversion compared to internet marketing. The most successful investors/sellers have a killer online presence. Today, you really can’t even think about finding buyers without video marketing. But there is much more you can do when learning how to find a buyer now.

You don’t need to reinvent the wheel. How to find a buyer is done:

  • Without hiring an entire marketing team.
  • Without plowing all of your early profits back into a marketing budget.
  • Without spending every waking moment hunting down free real estate marketing advice.
  • By taking action instead of being hamstrung with analysis paralysis.

#1. Content Marketing. Before you send anything out to an email list, post an advert, or publish anything, you need to develop your content. The reason is that content is what people are looking for online. Every Google search is a hunt for the answers and solutions that you can be providing. If your content is valuable, you will build credibility, generate traffic and leads, drive social media shares, build your brand, and much more. Then, when you do send out an email, people want to read what you are sharing.

[infusionsoft_on_click_intent optin_id=optin_6 display=inline] [/infusionsoft_on_click_intent]

#2. Content marketing defined. Content marketing is different from advertising. Instead of hype and glitter, content marketing helps solve people’s problems and provides fresh insights to be considered. Think about the media you prefer, online articles, newspapers, magazines, movies, etc. Do you anticipate the content or the advertising? It’s the content- right? Point made.

How to Find a Buyer Now – Knowing Your Market Content

There is more to figuring out how to find a buyer now than only describing the house itself. The neighborhood restaurants, crime rates, schools, and shopping centers all play roles in the buy decision. Be sure to feature these at least in part with your marketing content.

Sometimes, going small with a niche market is best. If you’re near a large military installation, you might want to focus on that niche market. When you go with a niche, detailed content is critical. When you get it right, your name becomes known, it’s passed around (word of mouth) so that you become the ‘go-to’ expert within a common group of people. Other niche options focus on golf course homes, homes on lakes, and other specialty markets. Niche markets demand high-quality content.

How to Find a Buyer Now – With Content

Once you have your content, you’re ready to move forward with how to find a buyer now. There are so many options that it’s essential we narrow it down. For that reason, we’ll stay with online marketing. Even with that, you still have many options including the biggies:

  • Email Marketing
  • Social Media Marketing
  • Pay Per Click [PPC]

Easily, 70% of people who visit your website or Facebook page never come back… Gone for good! Unless you capture their email addresses and add them to your mailing list. Compared to social media and other online marketing apps that are available, email might feel like it’s from another day and age. But when it comes to delivering current and relevant content, email marketing has an insane ROI and best of all it converts like crazy.

Besides the best ROI, email has higher click-through rates than any other media. It still converts like nothing else you’ll find today. Keep in mind there are 3Xs more email accounts than all of the Facebook and Twitter accounts combined!

Build your email list in every ethical way that you can. If you have Facebook and Twitter accounts, use these to funnel visitor email addresses to your email account. Get on every wholesaler’s list, these people have to find houses to buy somewhere. Gather business cards from seminar and investment club attendees, their cards give you email addresses so they can stay in the investment loop. The same applies with Realtors you come in contact with and weekly classified papers where investors advertise. Also, there are hard money lenders, real estate attorneys, people attending real estate auctions and tax deed sales. Email addresses are everywhere.

Those are only the basics to how to find a buyer now – finding the first 500 email addresses. Stay tuned for more about how to find a buyer now – more ways to deliver content to 15,000 or more people at a time!

By Wendy Patton

For more than 30 years, I’ve used the Sandwich Lease Option System to earn my students and myself 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 in finding profitable deals. It’s because of this 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.

Rent to Own Properties Done Ethically

As a rent to own properties investor, your goal should be putting people into houses and turning renters into homeowners.  A ‘few bad apples’ give the rent to own investment strategy a bad name, which is a shame, because it is a great strategy.

I don’t believe in the strategy of repeatedly churning rent to own properties to collect multiple option fees from multiple potential buyers. Instead, when done correctly, the rent to own properties strategy is a win-win for both the buyer and the seller. By doing this ethically, most buyers complete the purchase, your good reputation grows, buyers tell family and friends, with more deals flow to your business.

Rent to Own Property Buyers Need to Understand the Details

For the rent to own properties strategy to work best, potential buyers need to be confident that they’ll be ready to make the purchase when the lease term expires.

If the purchase isn’t completed, they’ll have paid substantial nonrefundable option money with nothing to show at the end. That becomes what they tell family and friends.

Buyers need to read and understand every word of rent to own property contracts and know exactly what they’re getting into. These are not standard purchase agreements. Each one is unique. These people may not have ever purchased a home before. Sellers should encourage buyers to seek the help of a qualified attorney. A qualified real estate attorney who clarifies the contract and their rights, before signing anything.

If they decides not to or can’t purchase the property at the end of the lease, the option simply expires. If the wording is ‘lease purchase’, without the word ‘option’, the buyer could be legally obligated to purchase the property but have not ability or desire to do so. Clarifying the wording is one of many reasons buyers should have the contract vetted by a real estate attorney before agreeing to it.

Rent to Own Properties Offer Buyers Many Benefits

Most tenants considering rent to own properties don’t think they can qualify for a mortgage.

The fact is that many won’t. But today is the time to learn what it takes to qualify in the future, maybe in 2018. Interest rates remaining near all-time lows means that mortgage payments are also at all-time lows.

Myself and other real estate experts fully expect home prices to continue appreciating in value. That means home affordability is more attractive today than it will be for the foreseeable future. Not being able to qualify for a mortgage today doesn’t mean you can’t lock in the best purchase opportunity that you may see during your lifetime.

Best Place To Start

Granted, sellers of rent to own properties often sell for a premium price. That should NOT keep buyers out of the market, especially when they are close to qualifying for a mortgage. Locking in the sales price of an appreciating rent to own property possibly means the sales price today will be at, or below, market value when the deal actually closes.

The best place to start is by achieving the FHA loan prequalification essentials:

  • An established steady employment history, at least two years with the same employer.
  • Consistent or increasing income over the past two years.
  • Your credit report should be in good standing with less than two 30-day late payments in the past two years. The minimum FICO score can be as low as 500 (subject to change).
  • Any bankruptcy on record must be at least two years old with good credit for the two consecutive years.
  • Any foreclosure must be at least three years old with good credit for the past three years.
  • Mortgage payment must be approximately 30 percent (or less) of your total monthly gross income.

If you can answer YES to these statements, you should have no problem qualifying for an FHA home mortgage loan. If not, rent to own properties allow you to work towards these goals over the next couple of years with a purchase price locked in today.

 

Rent to Own Properties Have Flexible Contracts

Buyers should treat rent to own homes as any other purchased agreement. They should have an appraisal done and have the home inspected before signing the final contract. Then the buyer needs work with a mortgage broker to develop a plan enabling them to qualify for a mortgage before the option period expires.

By working with real estate professionals, including an attorney, rent to own properties can have contracts drawn up to satisfy both the buyer and the seller. The seller no longer has a vacant house to deal with.  While the buyer is able to overcome down payment and mortgage hurdles.

 

Length Of Purchase Option Flexibility 

Part of the flexibility that comes with rent to own property contracts is the length of the purchase option. These typically range from one to three years. If the seller wants to cash out of the deal asap, they will want a short option period.  If the buyer needs more time to repair their, or increase the down payment, they’ll want a longer option period. In some cases, the seller decides to carry the financing after finding the buyer is reliable about making monthly payments. There are significant tax advantages for the seller when they takes installment payments versus a lump sum.  This is particularly true when it’s an investment property rather than a primary residence.

 

Rent To Own Properties Conclusion

Rent to own property agreements are among the most flexible real estate contracts available in this dynamic market. This article only covers some of the options and requirements. I have many other articles available and strive to keep information about rent to own properties current with today’s market. You’ll find more information by clicking here.

If you want to work directly with me on the lease options business model or any of the other investing models that have proven highly profitable, please join me at www.wendypatton.com/what-is-wendy-pattons-inner-circle.

By Wendy Patton

For over 30 years I’ve used the Sandwich Lease Option System to earn myself and my students millions of dollars. I know there is plenty of opportunity in the real estate investment market for everyone 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.

 

 

Cash Out or Reinvest Real Estate Holdings

Real estate investing goes through cycles. There are times to buy (low point of the cycle), times to hold (middle), and times to sell (high). This isn’t complicated. All types of investing are about buying low and selling high. What is more complicated is deciding whether to cash out or reinvest your real estate holdings.

The ideal time to buy in the current cycle (low point) was 6 or 7 years ago. Since then, rents and property values have been steadily increasing. Making these years the time to hold and profit (mid point). I don’t have a crystal ball but based on many years of experience, now is the time to be considering selling at the high point. With that, comes the decision to cash out or reinvest your real estate holdings.

The Buy, Hold, Cash Out or Reinvest Cycle

It may not have been clear then but it’s clear today that the time to buy was 7 years ago. The market was flooded with foreclosures, REOs, short sales, and individuals desperate to sell. Buyers were very few and very far between. Unemployment was stretching for historical highs. Foreclosures and unpayable debt trashed people’s credit ratings by the millions. If you didn’t have cash, even a stellar credit rating probably won’t buy you a mortgage. Still, creative investors found ways to gain control of properties for little or nothing down. But that was not the time to cash out or reinvest.

The past several years have been a time to hold as people got back on their feet after the financial meltdown. Today, foreclosures and bad debt are falling off people’s credit reports. An unemployment rate below 5 percent is considered a fully employed economy. Property values and rents have been steadily increasing. This may seem predatory to some people. However, buying those short sales and rehabbing foreclosures got many people out of bad situations. More recently, the lease with option to purchase has helped return countless people to homeownership. It was a win-win during tough times.

Right now, markets like San Francisco, New York City, and Los Angeles, are well beyond the last bubble peak in terms of pricing. If not declining in price, these have become price stagnant. Bidding wars are dwindling as the result of few buyers being able to afford or willing to pay peak prices. While real estate investing is always driven by local markets, today’s national circumstances strongly indicate a time to consider if you should cash out or reinvest.

Cash Out or Reinvest Considerations

Hopefully, as a real estate investor, you find yourself in the enviable position of needing to decide whether to cash out or reinvest the appreciated value of your existing properties. The place I highly suggest you begin is by performing a thorough analysis of all investment properties that you currently own.

You may or may not have financial holdings outside of real estate but I’m only dealing with real estate investments. You want to take a very close look at your real estate holdings to prioritize a list of them from best performing to the least performing. This isn’t always about the property generating the most cash. If you’ve followed my on-going advice, you are controlling property with the least amount of your own money invested. Deciding to cash out or reinvest involves looking at the Return on Investment generated based on how much cash you put into the deal rather than just the amount of cash the property is throwing off each month.

Positive cash flow of $500 per month from an initial investment of $1,500 is much better than the same $500 positive cash flow from a $40,000 investment (reclaim your large investment). With that in mind, conduct a thorough analysis to prioritize your investments from best to least performing. Those at the bottom of the list should next be considered for cash out or reinvest options.  

Cash Out or Reinvest Options

Once you decide to take the equity out of your investment(s), you have several options. Among the most common are:

  • Bring in cash via an equity line of credit or equity loan. This typically brings in 70 to 75 percent of the appreciated value. And you still control the property. Maybe use the money for another bargain investment.
  • Take out 100 percent of the profit by selling. This brings in more cash but you lose control.
  • Offer seller financing to maximize your cash flow and profit while minimizing taxes.
  • Use the cash to invest in another property or two or three. Think “controlling the property for the least amount invested”. Also, think about a 1031 Exchange for this.
  • Use the cash to pay a balloon payment that is coming due on a high cash flow property.
  • Use the cash to take your family on vacation. Taxes will be owed.
  • You might be able to refinance at a lower interest rate to both keep control of the property and improve cash flow.
  • Keep the cash in a reserve fund for emergencies or until a fantastic investment opportunity presents itself.
  • Use the cash to buy real estate secured notes paying 6 to 8 percent interest. This gets you out of the landlord business while still generating a healthy rate of return on your money.

Clearly, there are many considerations available when deciding to cash out or reinvest. If you’re faced with this decision, the good news is that you jumped into the market at the low point and rode it to a healthy profit. Good for you! Successful investors look for this exact opportunity. Now, may well be the time for you to analyze whether you should cash out or reinvest for another profitable round of real estate investing.

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.

 

Commercial Property Investing

Successful residential investors frequently look to commercial property investing to achieve even more financial security, wealth, and professional challenges. Commercial investing differs in many ways from residential investing. Property income, expenses, and values are often calculated differently, and success in this business requires speaking the language of commercial real estate fluently.

When it comes to commercial real estate investing, you have many more options than with residential investing. Commercial property investing involves retail space, offices, warehouses, hotels, multifamily apartments, etc. Many investors graduate from single-family homes to multifamily apartments as a natural progression into the commercial niche.

There are many upsides to commercial real estate investing. This is a look at investing on Main Street rather than a skyscraper in Manhattan. This is where you’ll find both motivated sellers and sellers interested in finding creative financing solutions. Mom and pop stores, as well as owners of small strip malls, and owners of small apartment buildings often have their retirement savings tied up in these commercial properties. When it’s time to retire, it’s time to sell.

Alternative Commercial Property Investing

Consider whether you’d rather manage a single mortgage on a commercial property with 40 units or 40 mortgages on 40 different single-family properties? Or consider a small office complex. Going forward, medical facilities will remain strong commercial property investing opportunities as baby boomers progress through their golden years. The transition of baby boomers into senior citizens also makes multiunit senior housing attractive.

I’m not big on the retail market but across small commercial properties, tenant demand is strongest for those at 5,000 square feet and below. The space in the 5,000 to 7,500 range is also worth considering. Lease terms are typically between 36 months and 60 months. Providing much more stable cash flow than one-year residential leases.

Commercial property investing is still about location, location, location. It’s always critically important that you understand the numbers and situation of the local market and industry that you are considering investing in.

Commercial Property Investments – You Don’t Need Big Cash to do Big Deals

Commercial property investing often involves seller financing. Especially for mom and pop operations when the seller needs a reliable retirement income. However, sellers don’t always see it this way. When they put their investment property up for sale, they envision an “all cash” sale. Yet, these are more sophisticated people with business experience that most residential sellers don’t possess.

What do you think happens when your creative financing solution fills the seller’s cash needs while also getting you into the investment property for zero down? I’d say that’s a win-win situation that motivated sellers will go along with.

The key is knowing what the commercial property seller is planning to do with the cash and how much they need for that purpose. Rarely do sellers need everything they want to be paid at closing and/or they have other options they can fall back on.

When your motivated seller accepts 15% cash (meeting their real cash needs) and carries the 85% balance, you can be in the driver’s seat of a commercial property investing deal as the new owner at zero down. Once you establish and agree to pay cash meeting the seller’s needs, you have the option of finding private money to finance the cash portion and have the seller carry the balance of the financing….

Using Private Money to Finance Your Commercial Property Investing

Another critical piece of commercial property financing is knowing there are still billions of dollars in private money sitting on the sidelines today. Many individuals that were trounced by the last stock market plunge lost 40% or more. They aren’t buying into the Wall Street’s hoopla again anytime soon.

These individuals have $100s of thousands and even millions sitting in bank CDs or money markets collecting a miserly 1% interest or less. These people are searching for secure investment opportunities paying 5% to 7% interest. Anything above the inflation rate looks good to them.

What if you offer them a senior lien position to finance the cash portion of your investment? A mortgage where the property is worth 110% more than the loan is for. It’s easy to see highly secured loans are much more appealing than a 1% CD and with nearly zero risk to them.

That’s called coming up with win-win, zero down, financing. A Private money loan for the 15% cash price with the seller financing the 85% balance to give him or her a steady retirement income from installment payments. This is a basic tactic in my overall strategy to control as much real estate with the least amount of your own money invested.

If you want to further discuss this tactic or other wealth building tactics, please click here.

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.