How to profit from lease options?? Help

1) Yes

2) Yes

3) Yes. Two seperate documents. One with right to sublet, the other without. Some other differences as would be rent amount, payment date, option fee, option price.

4) Yes, they are perfect candidates

Hope this helps

One more comment: make sure the lease option you execute with the seller allows you to sublease. Sometimes they don't by default, and the seller will think you're the one renting through the lease option. Make sure your intentions are clear.

- Tom

You make your money in 3 positions with a LO. Up front with a non-refundable security deposit, in the middle with the rent being above what you are paying in PITI, and in the end when you sell the prop above what you paid for it....Jan

Thanks for all the info..
I seem to be getting the hang of it. Another thing, I am also giving the sub tenant a lease option correct, and what do you all feel is the best way to find a good LO that will fit the criteria.
Also, in the end when the sub tenant decides to exercise the option, is there only one close at title with their funds paying off my option, or do I have to close the first option, then have sub tenant close my option??
Thanks for all the good advise.

Actually, according to what I've been reading, one of the things that makes L/O perfect for today's economic environment is that they work well even if a property has no equity at all, or even upside down by a bit.. because the buyer is buying the *opportunity* to get into the property without the usual qualifying for a mortgage, closing costs, etc... and therefore willing to pay a little more "at a future date" for that privilege. (Say a property is worth $350k FMV and the owners owe $360k... a buyer may well be pleased to get the property for $360k in 12-24 months, regardless of its appreciating or depreciating. And likewise, the seller is desperate to sell, and not looking to make anything, but thrilled just to have their payments go away and their credit not get ruined, while someone else keeps the mortgage paid until they eventually buy it for the mortgage balance.) Of course, the eventual sales price is negotiable as well as the rent, so the investor needs to just figure out a win/ win scenario for everyone.

"Last, do you all recommend a first time home buyer that doesn't have the credit to get a loan consider a lease option as well for their first time home."

I prefer to put someone in that will actually buy the house eventually. I run them through my mortgage guy and he tells them what they have to do in order to be able to buy the house within a couple of years. Then I have credit repair i can run them through. Then they know up front what the real deal is. Many take the bad credit, no bank qualifying approach, but eventually the credit and bank qualifying will have to be there for the tenant/buyer to purchase the property. If they cannot realistically get their credit together and have the income/down payment to qualify within the option period, you are setting them up to fail. Then you have to go back to the seller and say "Sorry, I know I told you I was going to put someone in your house that would buy it in a couple of years, but things didn't work out. Here's your problem back."

What your lease option says with the seller. The longer term you can get with your seller, the better it will be. That way, if for some reason they can't buy the house, you can turn around, rinse and repeat with another buyer. All the option money and the small monthly option they pay (in the rent) you keep, too. Then, you don't have to go back to the seller.

There's a couple ways of doing a lease option one might understand your talking about is what they call the sandwich lease option will you make money in the beginning money in the middle and money at the end. And I call this Greg Murphy style for this to work. Seller must have plenty of equity that he is willing to share with a sandwich lease option you carry a great risk, but with great rewards at the end. Another way, which I use most of the time is the cooperative lease option, also known as wholesaling lease option. This strategy is good today because most homeowners or sellers do not have any equity in the house. I usually get. 4% option fee with this strategy. I truly have no risk whatsoever you make less, but no risk better the fast nickel than the slow dime. I've been doing. Cooperative lease option for the last year and is working like gangbusters.
If you need additional information please p.m. me.
Thanks, Reuben

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