RESOURCES FOR CHAPTER 1
Articles:
Educational Webinars:
Watch this webinar that explains the Cooperative (Wholesale) Lease Option more in depth.
YouTube Video Tutorials:
Wendy Patton discusses when to do a cooperative lease option and when to do a sandwich lease option.
Educational Material:
CHAPTER 2
Success Stories of Sandwich Lease Options
The best part of doing a lease option deal is being able to witness the end results. Unless a deal is a win for each party, walk away from it. The seller must win, the investor in the middle must win, and the tenant-buyer must win. When all three can win in a transaction, there is nothing better! This chapter contains stories shared by different investors in different parts of the country. The sellers’ and buyers’ names have been changed, but the numbers and details reflect the specific transactions. These deals will inspire you and show you how you can also be successful and create unique solutions for motivated sellers.
Lease Option Case: Steve’s First Deal
This study is important because it describes a first deal. I like it because it highlights how each party to the transaction was able to come away as a winner. Here is how Steve described it.
Sara had a house in Fowlerville that she kept after her divorce. She couldn’t stand to continue living with the memories from the marriage, so she bought another house in Fenton, closer to where she works. She had the house “For Sale by Owner” and “For Rent”. She wasn’t excited about being a landlord, but she was looking for debt relief in a quick way.
I called on her “For Rent” ad and we met to discuss some options. I agreed to start paying her $1,100 per month immediately (because that is what she needed to cover her expenses) and for $1,000 I bought an option to buy at $155,000 sometime within the next three years.
I put about $300 into the house to fix a few things, plus a home inspection and title search, so my costs were minimal; around $500.
Two days after I signed with the Sara (the owner), a tenant/buyer from my accumulated list paid me an option fee of $5,000 and the first month’s rent of $1,195 to move in. The lease term was 18 months and the buy-out was $169,900. There is no lease money being applied to the purchase price. The lease started several months ago and they have been paying every single month early. They have never called me with an issue of any kind, so it is going about as smoothly as I could ever hope.
I liked this deal because the owner was very happy that I took the house off of her hands, and she always receives rent from me by the first of the month. The tenant/buyers were very happy because they were able to get themselves and their 3 children from an apartment into a nice house on an acre of land. This is a “win” for me also because I made money on the front end with the option fee of $5,000 plus $95.00 monthly cash flow, and the whole deal will make over $16,000. Not bad for my first deal!
S. Giroux - Michigan
Lease Option Case: The Buyers Provide Cookies
This is a fun story from two of my students who really got off to a great start on their first lease option deal. They did such a great job that their buyer has bought additional properties from them and even sends them Christmas cards and cookies! Here’s how they told it.
We attended your seminar on Lease Options in Seattle. Within one week of your seminar we located a vacant rental in a nice Seattle neighborhood and were able to negotiate a lease option with the seller. We put the home under contract to purchase it for her full asking price of $175,000. We were willing to pay $190,000 but did not need to go that high. We were to pay $1,000 down, payable in 90 days or when we found a tenant. We pay no interest with 100% of our $900 monthly payment going towards principle reduction. We have three years to cash her out.
We sold it on a 1-year lease option in about 10 days for $200,000. That was a great deal for our buyer. We’re confident we could have sold it for $220,000.
We took $10,000 down, leaving us $9,000 after paying the $1,000 to our seller. We are getting $1,295 a month from our tenant with no rent credit and none going toward reducing their principle. We got a $395 per month positive cash flow for one year that added up to $4,740 + $25,800 after one year when our tenant exercised their option.
After making $30,540 on our first deal using the strategies you taught us at a half-day seminar, we signed up for your next 3-day lease option bootcamp and ended up acquiring 19 more properties the following year, and two of them were clients referred to us by our buyer who has now acquired two more rentals from us. Our buyer still sends Christmas cards and cookies and continues to thank us for helping them buy a home when no one would loan them money because of a previous bankruptcy.
Thank you for sharing your lease option strategy and inspiring us to jump out of our comfort zones.
The Barclay Brothers, Washington
Lease Option Case: An Investor Reaps What He Sows
This is an interesting case that shows the value of establishing relationships with Realtors®. You may recognize Shaun’s name—yes, he is a master of Short Sales himself, but he started out just like you and me (it’s good to know different real estate methods so you can turn anything into a deal!).
Shaun got a call from a Realtor® that he had spoken to over a year earlier. She had kept his card. This particular house had been listed for six months without luck. The seller had moved out of state, leaving the home empty for the last four months. Shaun was able to lock in very flexible terms to create a terrific deal for him while relieving the seller of his burden and allowing a new buyer a fresh start.
This deal came as a referral from one of the realtors that I talked to OVER A YEAR AGO!!! She called me out of the blue from my card she had kept. Here are the numbers:
$700.00 per month – Lease option price from seller
$850.00 per month – Lease option price to buyer
$150.00 per month – profit
$132,000.00 – Purchase price from seller (for as long as I want… I can buy this house for this price in a month or in ten years; he didn’t care either way)
$159,000.00 – Sales Price to buyer within 24 months
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