The cooperative lease option is the ATM of real estate investing when you want to pocket fast cash. This happens by bringing together two powerful mainstream real estate strategies – WHOLESALING AND LEASE OPTIONS. Why is the combination of these two strategies so powerful? Because wholesaling allows you to offer great deals and lease options get you in and out of these deals with minimal risk and little or no money.
Cooperative lease options are for the beginning investor and the busy investor wanting to complete a fast deal in 4 short and easy steps!
The Art of Flipping a Real Estate Lease Option
Flipping houses has become a phenomenon in the real estate investing world. The problem is that flipping houses is a big risk that takes big money. You must outright buy a house that can easily cost $225,000, plus all the closing costs, and you will probably need to qualify for a loan. Once you own the house, you need another $40,000 or $50,000 to do the renovation that also requires you to manage several crews of subcontractors. Then you are going to pay a real estate commission when you finally sell the house six months later.
A traditional house flip takes TOO MUCH MONEY. TOO MUCH RISK. TOO MUCH TIME. TOO MUCH WORK.
Cooperative lease options flip houses WITHOUT any of the hassles!
Cooperative lease options are about connecting a seller willing to lease with an option to buy with a tenant-buyer ready to move in but needing just a little more time to qualify for a mortgage.
As the cooperative lease option investor, you show them how to do it and help them put the contracts in place.
For your knowledge and minimal work, you collect a handsome payday that comes out of the tenant-buyer’s lease option fee.
That’s It! That is the Art of Flipping a Real Estate Lease Option! That is a Cooperative Lease Option!
A wholesale deal is the assignment of a real estate contract to a tenant-buyer. The wholesaler (you) collects a “finder’s fee” or “assignment fee” for finding the property for the tenant-buyer. This is exactly what a cooperative lease option does. It flips the lease option from you to the tenant-buyer.
A cooperative lease option investor never actually owns the property. You only secure the property under contract and then flip the contract to the tenant-buyer – without ever going to the closing table. Simple, no risk, little or no money, super-fast, and no hard renovation work required.
It means the seller will have a tenant-buyer in the house to generate rental income to make the mortgage payments until the tenant-buyer qualifies to complete the purchase. These tenant-buyer is willing to pay top dollar for the house, which means the seller will collect the full market price for the house.
What you do in a cooperative lease option is bring the seller and tenant-buyer together for a lease option and collect an option fee from the tenant-buyer but then you step out of the deal. The seller and buyer only have to complete the sale before the end of the option period.
This is a WIN-WIN-WIN for the seller, you as the investor, and for the tenant-buyer.
The 3 Ideal Times for a Cooperative Lease Option
The sandwich lease option is the most profitable and most preferred method for investors to connect sellers with tenant-buyers outside of traditional channels. But there are times when cooperative lease options are the better choice for everyone involved.
Three of the best times are:
1. When you (the investor) are just getting started and could use a quick deal to generate fast cash. After one or two cooperative lease option deals, you can move one to the more profitable sandwich lease options or other methods in the Wealth Building Arsenal.
2. When you have maybe a dozen sandwich lease options under contract and generating monthly rental income (let’s say $250 per house per month) but it will be several months before a tenant-buyer closes a purchase to generate your biggest payday. The cooperative lease option lets you have your cake and eat it too when you have a steady monthly income from sandwich deals and can still pocket a nice size extra payday while waiting for the dozen biggest paydays to arrive. This is a highly effective way for experienced investors to maximize the Wealth Building Arsenal.
3. You have a deal that will generate a decent lease option fee for you but there isn’t much equity (no big payday) for you to earn by holding the rental contract as a sandwich lease.
Let’s dive deeper into the version when the seller doesn’t have much equity…
Cooperative Lease Options for the Option Fee
As the investor, you are aware that a generous finder’s fee will come from the option fee, but the seller can’t or won’t leave much meat on the bone for you to collect a big payday when the tenant-buyer completes the purchase. Typically, this is because the seller doesn’t have much equity in the house. When it comes time for the tenant-buy to close the deal, the seller will need almost all of the money to pay off his/her existing mortgage.
If you want to, you could do this as a sandwich lease option. You could collect your part of the option fee upfront and collect your portion of the rent until the tenant-buyer completes the purchase. But there wouldn’t be much meat on the bone for you at the closing table. The rent portion is the smallest payday that you collect in a sandwich lease option. If you stay in the middle, you must track the rent payments, maybe be involved if a major repair is needed, and make sure the tenant-buyer is soon going to qualify for a mortgage. This is probably going to take a year or 14 months. It’s not a huge amount of work but it is for your smallest payday because there is no meat on the bone at the end of the deal.
This makes it an ideal time to get in and out with a cooperative lease option by collecting your finder’s fee at the beginning.
The 4 Short and Easy Steps to Every Cooperative Lease Option
Here is how simple it is to get started with cooperative lease options. It doesn’t matter which of the ideal situations you find yourself in, there are only 4 short and easy steps to every cooperative lease option.
1. Find any seller that will benefit when you can bring them hard-cash in two or three days along with a paying tenant in to cover their mortgage – a paying tenant today that will pay full price for the house in a few short months.
2. Find a tenant that has part of the down payment that can be used to pay the option fee and will soon qualify for a mortgage. One advertisement on craigslist will probably bring 10 or more telephone calls the first day.
3. Use the template contract to put the cooperative lease option in place between the seller and the tenant-buyer.
4. Collect your “finder’s fee” that comes out of the option fee paid by the enthusiastic tenant-buyer.
Step 5 – Exit this deal to move on to another cooperative lease option or a highly profitable sandwich lease option!
Got questions? Drop me an email at: LIMITLESS OPTIONS
NOTHING IS STOPPING YOU from jumping into real estate investing TODAY with no risk and little or no money!
- Investing In Real Estate with Lease Options.
- Advanced strategies for Buying and Selling with Lease Options.
- Cooperative Lease Options.
- Working with Realtors.
- You’re Wealth Building Arsenal.
- Add Personalized Coaching.
- Expand to 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.
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