Lease Options, Let Your Tenant Do the Repairs
Written by admin on April 18th, 2008{ 7 comments }
Lease options in this economy aren’t hard to fill… but what do you do when you have a sub-to or seller financing property that needs work and is still a good deal, but you just don’t have the casharoo to “perty it up”? You lease it AS-IS!
Real estate investors typically put money into these “rent to own” deals to spruce them up before they sell, at least to paint and carpet, but sometimes it’s just NOT needed. If my options are either put $4,000 into the deal, then get a $8,000 option fee, OR do nothing, and get $4,000… well, you don’t need to get hit upside the head too many times to make that decision, do you, Simon?
Follow the steps to fill a lease option without draining your bank account!
- Market the property saying “rent to own, work for equity”, “Your hammer = Money”, “Work For Deposit”, or something similar.
- Take calls, and explain to the buyer how a lease-option, rent to own deal works.
- Ask buyer “how much they have to put towards the option fee, which is LIKE a down payment?”
- Let the buyer know you desire a bigger option fee, but you “might” be able to reduce it if they’d take the property “as-is”.
- Negotiate the deal, as a “win win” for all involved. (maybe spread out the fee payments over future months)
- Close the sale, and move on to the next deal!
Of course there’s other, smaller steps in between, but that’s the “jest” of it! If you have any questions, join us on any “Flippin Midnight”, or send your question to flippinhelp @ gmail.com , and we may address it on a future episode!
7 Responses to “Lease Options, Let Your Tenant Do the Repairs”
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April 23rd, 2008 at 12:56 pm
I just watched your seller financing video…it was very informative. Can you tell me what the best way to buy a property using a “seller finance” when the existing mortgage is about to be forclosed on? Thanks for your videos and for any response. -James-
April 23rd, 2008 at 1:54 pm
Hi James, thanks for the comment!
If the property is about the be foreclosed on, there are definitely ways to turn it into a type of seller financing deal. You’d want to either go the subject-to route, or straight seller financing, with you getting the house deeded to you, and you paying the lender directly.
The question that needs to be asked beforehand: is there enough equity in the deal after bringing the payments current to make it worthwhile… and… do you have the $ to bring the note current, OR can you get enough option deposit/fee from a tenant/buyer (selling lease-option) to cover the back payments?
If there’s enough equity AFTER bringing it current, you would buy it subject-to, bring the mortgage current, put the house in your name, and sell by lease-option.
If the seller is cooperative, you could have him/help him to negotiate with the bank to work out a payment plan on the back payments as well… this way you wouldn’t have as much $ up-front to make it work.
I hope that helps!
Nick
May 9th, 2008 at 1:06 pm
hi Im so happy i found your site its a dream come true to be mentored for free. I am with a team of guys that are trying to make me find deals for them a give them the end sale that doesnt feel right. I just need the right contracts and teaching and ill be ok all by my self. thanks.
May 9th, 2008 at 1:14 pm
Anthony, we’re glad you’re here. I try to give useful tips and content for free, so investors can at least get some basic training without spending an arm and a leg, lol. Make sure you’re on the pre-launch list at http://www.rei-tv.com so you get notified of the training sessions and other freebies!
Nick
May 15th, 2008 at 4:23 pm
Hey there, just came across your blog, in Yahoo.com when I did a search for lease. I’m gonna bookmark it.
March 30th, 2009 at 1:53 pm
Good morning Nick, I’m a investor newbie My nitch is wholesale/lease options here in san bernardino Ca . My problem is getting that first deal going, all the wholesale deals are all owned by investors and require cash or hard money, How do I get my first deal Do I start with a Subject To deal to get a property? Then a lease option.
April 1st, 2009 at 10:51 am
I would suggest targeting your marketing to homeowners, so you’re not talking to other investors as sellers, but the non-investor homeowner. In other words, find the deals BEFORE they get to other investors.
That’s the same solution if you want to pickup subject-to properties.
Nick