It’s still a sellers’ market and that doesn’t look to be changing any time soon. Why do I start with that? Because in a seller’s market, the seller expects to get as much for their house as possible. This is one of several times when it can make good sense to go with a cooperative lease option.
Here is why a cooperative lease option makes good sense in today’s sellers’ market…
The Market is Right for Cooperative Lease Options
Our world is full of stories about investors going from rags to riches with one or two deals. For many needing an economic foot-up, the path forward is cooperative lease options. Most of the time I write about how a cooperative lease is the best way for a new investor to get started with nothing down and without risk. And that is absolutely true… but I also point out that any real estate investor can use a cooperative lease option at any time to generate some quick cash — by giving the seller the full asking price!
Every other investor out there is squabbling over the last thousand or hundred dollars when their strategy is to find a distressed property for 70% of the fair market value so that they can make a decent profit.
What if you could pay the seller’s full asking price and make your money from the tenant-buyer?
The real secret in this sellers’ market is to make your money on the tenant-buyer’s side of the deal. It’s about collecting the tenant-buyer’s ‘assignment fee’ for a cooperative lease option that places them in a quality house that they gladly want to buy for the full asking price. The tenant-buyer’s problem is that the competition for nice houses is still so fierce that any blemish on their credit report drops them out of the running even when other buyers are offering less than the full asking price!
It’s still a sellers’ market but not always for the full asking price!
Just read the real estate headlines and you’ll find that the market is still red hot, except many buyers have run into an affordability wall. Rising interest rates are making it more and more difficult for sellers to get the full asking price from qualified buyers that are up against that wall. And that wall is getting higher every day. It means qualified buyers are putting pressure on sellers to accept less than the full asking price so they can squeeze into a high-cost mortgage to close the deal.
Tenant-buyers using a cooperative lease option are in a better position than ever to offer the full asking price.
Giving the Seller the Full Asking Price
Besides rising interest rates, another part of the affordability problem for all buyers is that the price of homes is still going up every month. That is what makes cooperative lease options work well for tenant-buyers today. These buyers don’t plan to sign a mortgage next month to close the purchase. By the time tenant-buyers sign a mortgage (in 12 to 18 months), the selling price of the home will have gone up significantly.
The tenant-buyers that you want to work with are not broke and looking for a handout. Many have been saving for their first home for several years but have some minor credit problem keeping them from being competitive buyers in the sellers’ market — until now!
A cooperative lease option is about getting the Seller’s FULL ASKING PRICE and you being paid a 3.5% or $8,500 ‘assignment fee’ from a qualified Tenant-Buyer!
These tenant-buyers have the money to get into the house today AND offer the full asking price. The seller gets a contract for the full price while it is still a sellers’ market. None of us know what will happen with the market in three months, six months, or a year from now. But the seller can get a purchase option contract for the full price in today’s market. This is very appealing to sellers that are receiving offers for less than the full price!
The tenant-buyers have money and a respectable job that will almost certainly be paying them more in a few months when their credit issue is cleared up and they can qualify for a mortgage at the full asking price. The only reason they are still on the homeowner sidelines is that they need a little more time to clean up a credit blemish. Today is their time to step into a nice quality home that they can become the owners of in a few short months!
Basic Steps to a Cooperative Lease Option
Here is what you need to know to make cooperative lease options work in today’s marketplace. Depending on your local market, you will find a seller wanting the full asking price for a $250,000 home. You put the home under an option contract for that price. You’ll have no trouble finding a tenant-buyer excited to make a full price offer on the house if they have a year or more to qualify for the mortgage. Then you simply assign your option contract to them for a 3.5% ‘assignment fee’.
That is the heart of a cooperative lease option.
Other investors are walking away from these ‘full price’ deals because there is no equity in the deal (can’t buy for 70% of fair market value). And cooperative lease options are much easier to work with because you’re not working with desperate sellers that are months behind on their mortgage payments and on the verge of foreclosure.
But… make sure that you do a cooperative lease where you understand how to structure the deal with the seller, with the buyer, and to make sure that it’s all legitimate and legal. Definitely make sure you have the right paperwork and that you’re working with someone who knows how to do these.
Then go do a no money down, no risk deal by:
- Finding a seller ready to take a full price offer.
- Getting the property under an ‘option to purchase’ contract.
- Finding a qualified tenant-buyer with the ‘assignment fee’ and a good chance to get a mortgage in 12-18 months.
- Signing the lease option paperwork with the tenant-buyer.
- Assigning the lease option paperwork back to the seller.
- Keeping the ‘assignment fee’ and giving the seller the first month’s rent
- Putting the tenant-buyer in a credit repair program if needed.
- Deposit your money and move on to the next deal!
Simple… really! That’s why I love this business so much. Almost anyone can easily do 2 or 3 of these deals a month.
Imagine what you could do with an extra $12,000 – $18,000 in your hip pocket every month!
The world is changing for everyone. You want to be part of this by taking action with cooperative lease options. Here is where you begin RIGHT NOW:
- Cooperative Lease Options.
- Advanced strategies for Buying and Selling with Lease Options.
- Your Wealth Building Arsenal.
- Investing In Real Estate with Lease Options.
- Add Personalized Coaching.
- Expand to Get the Deed “Subject To.”
- Round it all out by Working with Realtors.
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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