Wendy Patton, the nation’s leading author and trainer in lease options explains lease options and her one day course in this video. She talks about how to buy properties without using your own money or your own credit.
She talks about getting Realtors to work with you on lease options. She explains calling home sellers and getting them to sell you their home as a lease option.
Wendy Patton talks about screening home buyers and home sellers. She also talks about the importance of calculating the numbers so you know you are buying right.
These are all critical steps to lease option investing.
I, Wendy Patton, have had a website for some time now. But it was really just this year that I started learning about SEO – Search Engine Optimization. Most real estate investors don’t realize the importance of SEO for their website, but it is key for gathering your leads. When you are doing lease option investing or rent to own investing, or really any other type of real estate investing you want your site to be on the front page of Google for your area so that when those potential leads do a search on the internet they find you.
Real estate agents need this too. When home buyers and home sellers go online and do a search for there area, you want your name to be the one that comes up on the front page of Google. This is a great way to capture leads.
The great thing about SEO for real estate investing or real estate agents is that it is really extremely powerful free marketing. You can do it yourself and really reap the rewards with all of your extra leads. I’m certainly no expert in SEO, but I’ve really come to realize the importance of it for my rent to own business. I strongly recommend you take the time to do some SEO for your website.
Here is a short little clip I did while at a SEO training event I just went to.
I hope everyone had a good Memorial Day weekend. I spent mine in Houston, Texas getting training for SEO.
I’ve been getting emails from some of my lease option real estate investing students lately about numbers on their deals and some of you are willing to pay too much right now for your rent to own deals. Many areas of the country are down real estate markets and if you pay too much you are going to find yourself upside down when the time comes for your tenant-buyer to purchase your lease option deal.
It’s very important to stick to your guns about buying right in these kinds of real estate markets with your rent to own homes. Use the profit calculator I have in my lease option investing course so you can make sure your numbers work. Remember, you don’t get paid until you sell and if you are upside down you aren’t going to be able to sell your lease option investment.
When Wendy Patton first got started with real estate investing she thought no money down meant using credit cards to make the down payment. Take a look at this video to see just how many real estate investing deals she did with credit cards early on.
It took a few years but Wendy Patton learned better. No money down real estate investing is much better done with lease option or rent to own deals. Now Wendy Patton is one of the nations leading authors and trainers in no money down and low money down real estate investing with lease options or rent to own. In fact she has a lease option training bootcamp coming up in June that will cover in depth training in lease options and other soft market real estate investing techniques.
Any real estate investor, home owner or home buyer that does a rent to own deal needs to understand the process involving the appraisal of a lease option home when it comes time for the end buyer to purchase. The purchase price is agreed upon at the onset of the rent to own. Because the sale of a rent to own home takes place over time the home may go up or down in value by the time the end buyer is ready to purchase their lease option home. When it comes time to buy the rent to own home the buyer’s lender orders an appraisal. Three things can happen with that appraisal.
The lease option property appraises for the amount of the agreed upon purchase price. If this is the case everything can proceed forward without problem for the real estate investor, the home seller and the home buyer.
The rent to own home appraises for MORE than the amount of the agreed upon purchase price. In this case as long as the buyer has lived up to all of their obligations in the option contract, the home seller or the real estate investor MUST sell for the agreed upon purchase price. The buyer benefits from the extra equity.
The lease option home appraises for LESS than the amount of the agreed upon sales price. Of course we hate to see this happen, but sometimes if real estate markets are in decline it can. If this is the case, the home owner and the real estate investor are only obligated to sell for the original sales price. The buyer wouldn’t be able to qualify for a mortgage at that price so the deal would fall apart. While the home owner or the real estate investor are not required to sell the rent to own home for a lower price they may choose to. Let’s face it, the home has gone down in value, so they won’t be able to sell it to anyone else for more. The may want to drop the price to the appraised value so the buyer can complete the sale.
These terms are part of the lease option contracts that are so important when doing a rent to own sale. I explain them in great detail in my books, Rent to Buy, and Rent to Sell.
Also, take a look at this video where I talk about the appraisal versus sale price.
When buying lease option or a rent to own home, either as real estate investing or for your own home there are several steps you need to take during the process.
I’m going to look at 2 of them here.
The first step I want to focus on when buying rent to own homes is verifying the rental rates. As a rent to own home buyer you want to make sure the rental rates are both realistic for the area you are looking in and affordable to you personally. As a lease option real estate investor you need to know the rental rates for when you are finding tenant-buyers for the home.
One of the best ways to find out market rental rates for your rent to own home home is by looking at the local newspaper as well as the rentals online in sites like Craigslist. See what other properties in the area are renting for. Of course you need to make sure they are reasonably comparable to the lease option home you are interested in.
Another important step in the rent to own process is checking the title work. You want to make sure that whoever is on title is actually the one selling the home! This seems pretty obvious, but it sure can lead to big problems if you don’t make that verification. This means that everyone who is on title is selling the rent to own home. If a husband and wife are both on title they BOTH need to sign everything. You also need to make sure that the title is clear and can be sold, which we’ll talk about another time.
Take a look at this video where I talk about both of these steps to buying lease options. Here is a lease option article too, if you want more information.
When we are putting together rent to own deals sometimes our tenant-buyers don’t have that much cash available for an option fee. Many tenant-buyers live check to check which doesn’t leave a lot of room for saving up. Or they haven’t yet had time to save up an option fee as they were trying to deal with other bills, or just recently started working again. Whatever the reason, just because they don’t have a lot of cash doesn’t mean you can’t still work something out.
If a rent to own tenant-buyer is qualified for a lease option property in every other way but just doesn’t have enough money for the option fee – DON”T KILL THE DEAL! Work something out. Get creative in helping them find ways to come up with more cash for the lease option fee.
What are some ways?
Borrow money from relatives or friends. They could either borrow all of the money from one person or they could borrow smaller amounts from several. If they could borrown just $500 from 4 relatives that isn’t all that much for each relative but added together it’s $2,000. That can go a long way towards a rent to own option fee.
Sell stuff on Craigslist or Ebay. If they have some things they don’t use very much anymore have them sell it off. Most of us just accumulate stuff instead of selling it so it would be a good time for them to clean out the closets and so forth and find some sellables.
Have a garage sale. Some things are not worth enough individually to be worth selling on the internet but they could have a local sale to sell those things and help come up with some money.
Cash in on some jewelry. Gold is at a high price right now and if they have some things they don’t want anymore it would be a good time to cash in on the high price of gold.
These are just a few ideas for lease option tenant-buyers to come up with an option fee. If a tenant-buyer is reluctant to put in the effort to raise money for their rent to own option fee they need to ask themselves how serious are they about wanting the house?
Take a look at this video clip where Justin Ryan talks about helping rent to own buyers come up with an option fee.
In yesterday’s post we talked about the importance of Cash Flow – especially in down real estate markets.
We are going to look at Turn Key Cash Flow today.
There are a lot of people who want to invest in real estate but just don’t have the time to do all of the leg work involved in finding really good cash flow deals. Others live in parts of the country where properties just don’t cash flow. Let’s face it, no matter how much prices have dropped in some areas the rents still don’t match up to the cost of the properties.
Cash flow is so important though when you can’t count on appreciation in the short term. The best deals in real estate investing are rarely in your own back yard. But who has the time or the means to search all over the country for the right deals? Wouldn’t it be nice to be able to just buy a great deal that is completely turn key? Where everything is ready to go and the rental checks just start coming in?
Wendy Patton is going to talk about that in tonight’s webinar. This is a great opportunity for real estate investors. The webinar is tonight, Thursday May 14th at 8PM EST. Sign up now for this free Cash Flow webinar.
Wendy Patton will be the first to admit that there is more to real estate investing than just lease options. One of her other favorite real estate investing techniques is rentals that cash flow.
Many real estate investors are constantly knocking on doors and diligently working the numbers after they find a possible deal. They are constantly trying to get their investment properties to cash flow. It is one of the most elusive, yet the most prized accomplishment by real estate investors across the country when it is actually achieved.
If you only knew the countless times Wendy Patton has listened to other investors go through a deal they structured. After spending countless amount of hours and energy structuring the deal in the end, they end up with a deal that cash flows $100 per month or less. $100 per month??? If you have one month of vacancy during the year that will wipe out your whole year of cash flow!
The challenge with cash flow is it is hard to get a quality property in a desirable location, and have the numbers work.
Why is that?
For the most part if you are working with a desirable location and house, the purchase price along with the taxes and insurance make the numbers completely out of whack. So at the end of the day most real estate investors will not achieve the desired results.
Wendy Patton has a solution to this problem.
On Thursday, May 14th at 8 PM EST, Wendy Patton will share with you how you can get quality real estate investment properties with outstanding cash flow, a great exit strategy with a potential HUGE back end value! This webinar is free but you need to register quickly as space is limited. Join Wendy Patton on this Cash Flow Webinar
I get asked about simultaneous closings in sandwich lease options a lot. They are a critical component for real estate investors to getting cashed out of your rent to own deal, so it’s important to understand simultaneous closings. The concept itself is really quite basic. You will close on the buy side and the sell side of your lease option investment the same day at the same title company. All this really takes is some coordinating. The seller is pretty much ready to go whenever you are, after all it’s not like they need to move out or anything.
The coordinating really comes on the buyer’s side depending on when the buyer’s lender is ready to close. Work with the buyer’s mortgage broker so you know when to set this up. I go into a lot more detail on simultaneous closings in my book, Investing in Real Estate with Lease Options and Subject To Deals.
Take a look at this video where I explain about how simutaneous closings work
