NO START-UP CAPITAL NEEDED! Wholesale lease options (AKA Cooperative lease options) come in two distinct flavors. One will immediately have the beginning investor building a network with other more experienced investors. The other wholesale lease option technique will have you instantly jumping into the retail side of the business where there is more money. Doing one of each as your first two deals gives the new investor a foothold in both worlds – without needing start-up capital!
Wholesale lease options are the one-two punch that puts a solid foundation under your start-up real estate investment business!
Wholesale Lease Options Are About Using Other People’s Money
The hardest part about getting started as a real estate investor is finding the money for your first deal. I certainly didn’t have a spare $275,000 to buy a house when I got started and I don’t expect that you do either. When you think about “other people’s money,” your first thought might be a bank loan to make your first investment. But a bank loan is almost impossible to obtain unless you have a proven track record, a co-signer, or already have a lot of money.
What you need is a source of other people’s money that doesn’t come from a bank. What’s great about wholesale lease options is that it does not involve cash money. Instead, it involves the equity that a seller has in the house that you will wholesale. Equity that the seller isn’t doing anything with anyway. Sometimes the seller doesn’t even have much equity. Instead, what they do have is their name on the title of a property.
A seller with little equity finds it difficult to sell a house — which is where you come in with a wholesale lease option.
Why a Seller Will Agree to a Wholesaling Lease Option
The fact is that you have to hunt down wholesale lease option deals. When you find a motivated seller that understands the concept of wholesaling lease options, it’s not difficult to convince them to give you a chance to put together a deal.
One secret to convincing the seller to allow you to put together a wholesaling lease option is for your deal to be non-exclusive. That means the seller continues marketing the house in other ways. If you want to make your wholesaling lease option exclusive, you’ll pay the seller a fee to take the property off the market – but you don’t have to do that. You want the NO start-up capital deal!
The objective of a wholesaling lease option is for you to earn a fee without investing anything other than your time.
Wholesaling Lease Options Technique #1
In this version, you wholesale the lease option to another investor. The only thing the other investor needs to understand is how lease options work. That it is an option to purchase the property but not a requirement to buy the property. The other investor can do whatever they want with the property. They can complete the purchase and turn it into a rental, or they can rehab the property to sell it to an end buyer. If they want to, they can turn it into a sandwich lease option. They might even decide to try turning it into a “Get the Deed “Subject To” arrangement. What the other investor does is completely up to them. All you are doing is collecting a fee to assign your option to purchase the property to the other investor.
You are the birddog doing the work to find a seller needing a creative way to sell a difficult to sell property. What you do need to know is that if you sell the option to another investor, you will have to leave a decent amount of meat on the bone (money). However, a savvy investor will recognize a great deal when they see it and hand you a cash fee immediately.
You take the investor’s option fee as your assignment fee in a wholesale lease option.
Wholesaling Lease Options Technique #2
In this version, you wholesale the lease option to a tenant-buyer but you immediately get out of the deal instead of staying in it the way you would with a sandwich lease option. When you sell to a tenant-buyer, it’s called a cooperative lease option. You will be selling it at the full retail price, which means there will be more meat on the bone for you than if you sell it to another investor.
You will still be paid to assign your purchase option to the tenant-buyer but you collect a higher fee because you will probably need to educate a tenant-buyer about how a lease with the option to purchase works. Most investors will already understand how this creative investing technique works but tenant-buyers don’t understand at first.
Another reason you collect a higher fee is that you will probably have to help both the seller and the tenant-buyer put the paperwork together. It’s the same paperwork that you would use with another investor but in this case, neither the seller nor tenant-buyer will understand where to begin or how to put the final paperwork together.
The templates for the paperwork come with the Cooperative Lease Options Course.
The Finances of Wholesale Lease Options
A 5% fee is reasonable for putting a wholesale lease option together. On a $275,000 house that comes to $13,750. That’s a generous amount considering that you’re getting in and out of the deal in a few days. Of course, if you stayed in the deal with a sandwich lease option for the 3X Paydays, you would expect to make more along the lines of $49,000.
You need the lease option to be assignable to an end buyer. That means you want to be upfront with the seller by telling them you’ll find an option buyer for 5% of the sales price. However, it doesn’t cost the seller anything out of their pocket.
The money comes out of your buyer’s option fee, which makes it painless for the seller.
Every deal is unique. If the seller has little or no equity in the property, your cooperative lease option fee could mean there is little left for the seller at the closing table. But there are ways to still make a cooperative lease option appealing to the seller. For instance, the seller might insist on something at closing – like 2%. That means you need to bring in a buyer willing to put up 7%. This is possible in a wholesaling lease option but a challenge. You want to work this out with the seller in the beginning. Often, it doesn’t take more than asking them if they want you to turn away any deals with less than 7%. The seller doesn’t want any deals turned away. They agree to have you bring any deal you find, and they will at least take a look at it. In the end, you want the cooperative lease option contract to state that you receive your 5% fee at closing and the seller collects anything above that.
A great thing about being a knowledgeable real estate investor is having the ability to write contracts in many creative ways.
I do not know of a faster way to collect a payday than you will with cooperative lease options but there are ways to make even more money. GET STARTED TODAY by clicking the Instant Access Links Below!
- Cooperative Lease Options to get started.
- Your Wealth Building Arsenal.
- Advanced strategies for Buying and Selling with Lease Options.
- Investing In Real Estate with Lease Options.
- Expand to Get the Deed “Subject To.”
- Add Personalized Coaching.
- Round it all out by Working with Realtors.
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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