Lease purchasing your way to wealth!
Every real estate investor is familiar with leverage (using borrowed money to increase the rate of return on investment)... but many real estate investors do not know that if you "control" a property rather than own it, you can make huge profits with very little expense or effort.
What this means is that you have total and complete control over every aspect of the property, but your name does not appear anywhere on the deed. Nothing can happen to this property without your consent. You can choose to live in it or make improvements to it, but most importantly of all, you have the legal right to sell it. How is this possible? Simply because a lease agreement gives you immediate control of any property in regards to occupancy. Combine this with an "option" to purchase you now have an exclusive, legal right to buy the property at a pre-set price. I know what you're asking yourself. "How can we make a lot of money using leverage to control these properties?" The answer is simple and it involves using very little money and very few of the headaches associated with being a landlord. First, we locate a property seller and negotiate an option to purchase their property using a "lease/purchase" agreement.
Let's assume that the seller agrees to lease/purchase their single family home to you for the following terms (for complete information regarding finding the seller, negotiating the contract terms and dozens of profitable ways to use lease/purchase options click here).
The terms are as follows:
$800.00 monthly rent payments, $1,800.00 down payment ($1,000 option deposit and $800 for the first months rent). You will also receive a $250 per month rent credit towards your purchase down payment; a fixed and agreed upon purchase price of $80,000 and a term of one year in which to "exercise" your option to purchase the property.
Keep in mind that you are at no time obligated to purchase the property. If for instance your tenant/buyers decided not to buy the house, you simply let your option contract expire at the end of the one year term. You would still pocket an initial $2,500 option deposit and another $1,200 ($400 a month more than your rent) in rental income bringing your total net income to $5,500. Not bad for a few hours work.
Let's assume that you did your homework and you got a pretty good deal. There should be room for a small mark-up in the sale price. You should take into consideration that you’ll be selling the property at next years prices when you figure your potential mark up and profit.
When trying to obtain a "lease/purchase" option it is Not necessary to negotiate a deep discount in price in order to make a substantial profit.
One thing you can be sure of is the value and appeal that a "lease/purchase" deal is to buyers who cannot qualify for a conventional mortgage or lack sufficient cash for down payment. This allows you to price the house slightly above full market value (next year's prices) and charge a higher monthly rent.
You would then place an ad in your local newspaper and your phone doesn't stop ringing. Your ad reads: "Lease-to-own." No qualifying! $3,700 down, $1,200 per month. Call 555-5555
You will easily attract many interested buyers. The terms are
$3,700 down payment ($2,500 down and $1,200 first months rent) a $200 monthly rent credit and a term of one year. The $2,400 in total rent credits are added to the $2,500 deposit and applied to their down payment at the time of purchase.
How much did you make? According to my calculations, you will make exactly $700 up front plus $4,800 rental income for a total of $5,500 on this one simple deal. You can easily build in an additional $10,000 into your selling price bringing total cash to $15,500. It's quick. It's easy, it's effective!
"Lease/Purchasing" is only one of the powerful low-risk, low-cost methods of real estate investing for profit. To find out more about making money with options and discover an arsenal of professional investor techniques that could be worth a fortune to you, check out "The Secrets of Real Estate Acquisition and Funding" located here. |
