Learn what a Cooperative Lease Option is and when investors should use them.

In a recent post I discussed why Soft markets are GOOD rental markets to invest in. Now is the best time to buy Real Estate.
Here are the 3 best ways to Buy Real Estate in a Down Market:
#1 Lease Options
Lease options are Great for down markets. The opportunities are plentiful because there are lots of sellers out there having trouble selling their homes. This means they are looking for alternatives, and what you can offer them with a lease option is a whole lot better than just renting out their home or having to do a massive price cut.
The other great thing about lease options in down markets is that you have extremely low risk. No matter what happens in the market you’ll come out okay, because you aren’t obligated to buy. But even if the market were to go down more you can always try to renegotiate with the seller and get a better deal so you can still close. To learn more about lease option investing visit my website at http://www.wendypatton.com

#2 Wholesaling A.K.A Cooperative Lease Options
Cooperative Lease Options is a safe form of investing in down real estate markets, provided you have end buyers lined up before you close. There will be plenty of opportunities for wholesale deals, but the challenge may lie in finding your buyers.
If you are doing Cooperative Lease Options it’s a good idea to have a strong buyer list lined up. You don’t want to close on the property without an end buyer because you are in a down market. If the market continued going down you would be stuck holding the property as the value declined.
What I really like about wholesaling is that you can keep your risk level low by not having to own the property. You just flip it to your end buyer. Minimizing risk in down markets is very important. To Learn More about Cooperative Lease Options Click Here.

#3 Cash Flow Rentals
Some down markets are positively flush with great cash flow opportunities. Down markets mean that the renter pool has grown as well. If you make sure the numbers work and that the rental market is strong you can do very well with cash flowing rental properties. Passive income every month is a great way to build your wealth.
While there is some risk associated with a rental property in a down market, because you do actually own the property you can easily mitigate that risk by making sure the numbers work before you buy. If a property cash flows you can hold it forever without having to worry about what the market does. To learn about some great cash flow opportunities, the same area that I’m buying in right now, Click Here

Sandwich Lease Option

A Sandwich Lease Option is a technique that has been used for many years but the technique has been overlooked by many. To me it is the hidden gem of the real estate investing world. When executed properly, you the investor will make money with the option fee, the back end and a monthly cash flow.  This means you get paid THREE ways.  Essentially, you lease a property with an option to buy it, and in turn you rent it out to someone else, also granting them an option to buy it.  You are in the middle, hence the reason we call it a “Sandwich Lease Option“.

Here is a picture of a sandwich lease option.   Note: On a lease option only the seller is obligated to sell.  The buyer has the “option” or privilege to buy, but not the obligation.

And where is the meat in a sandwich?  In the Middle.  The meat is the best part of the sandwich lease option.  This is where we want to focus.  How can we make the sandwich more profitable (by getting more meat in the middle)?

Here are some of the terms to negotiate when buying (with the seller) and selling (with your buyer):

• Monthly Fee (Rent)
• Length of time (Years)
• Price
• How much of the monthly fees (your rental payment) goes towards the purchase price

When you negotiate good terms with your seller you are making your sandwich lease option better; like adding a piece of cheese (this is more profit to you).                                                                                                                                                                                                        

Cooperative Lease Options

Cooperative Lease Options are a technique that I recently began teaching my students. A Cooperative Lease Option A.K.A Wholesale Lease Option is similar to a Sandwich Lease Option except the middle (meat) is removed up-front.   Think of it as a sandwich where the meat has been removed. I know, many of you are thinking what is a sandwich without the meat?  In other words how will you benefit from the deal?

Basically, you still find the seller and after you have the contract and the option to buy, you ‘take the meat’ and assign your option to purchase to a buyer.  In this scenario, you only get paid in one way (the assignment of your option) but you get paid today.  You don’t make as much on the deal, but you are done with it.  It is quicker and easier money then a sandwich lease option.

It is important to remember when doing a Cooperative Lease Option NOT to find the buyer for the seller.  It might sound like you are doing that and in essence you really are, but you can’t describe it that way or explain it that way to your buyers and sellers.  You are the buyer and you are “assigning” your contract to a buyer for a fee from them to buy your contract.   For example, I usually take the buyers option fee as my assignment fee for a wholesale lease option.  This can be anywhere from $2500-$10,000 in my area of the country. Can you use an extra $5000 this month? To find more information on becoming a Realtor you can check out my article on getting your license HERE.