What is A Lease Option?

A lease option is a real estate strategy where you “lease” the property from an owner with the “option” to exercise your right to buy at any time during your lease. You don’t have to exercise that right, but you can.

The KEY to using this as an investment strategy is to make sure that your agreement allows for you to sublease the property out.

Using the Lease Option as An Investment Strategy

In this case, you won’t really be able to do deals on homes where they are behind on payments, unless it’s a very small amount. Making deals where people are behind on payments is for Seller Financing, wholesales, or straight options.

This is a more “take over your payments” type of deal with a twist.

You are looking for properties that are nice, and in move-in condition. You are looking for deals that probably don’t have much equity.

In this strategy, you’ll first get the house into a lease option agreement. You can’t give a lot of money for the lease because you won’t be able to offset it with the money you get from your buyer.

Then, you run an ad like “Rent To Own” 4/2 Beautiful and a little other jargon. What you are looking for is a buyer (lessee) with, at the very minimum, $1,000 more than what you had to give as a non-refundable deposit.

Example: You find a beautiful home in move-in condition for $225,000. You negotiate a lease option deal where you have to put $500 as a deposit, and payments of $2,000. You run the ad like I talked about above and find a buyer that has $4,500 for a deposit, and will make payments of $2,100, and will agree to a total purchase/option price of $237,000.

Your take on the deals is a quick $4,000 up front with an extra $100 a month, and when they go get a loan to buy the property before their lease is up, you’ll make another $7,500 when the deal closes.

This is an awesome strategy for making money investing in real estate. This deal uses no banks to close up front, and allows you to pocket some quick change really fast.

Quick Note: These types of deals should help you get over your fears of investing. You aren’t putting much of your own money into the deals. Also, you can use the first find buyers strategy, if you really are still concerned.

To Your Immediate and Lasting Real Estate Investing Success,

Kenney

P.S. Don’t try and get rent credits or anything like that. There are laws passing now that prohibit that anyway.

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