OfflineOk y'all last night I had one of those REI dreams that I've read so many of you've experienced. When I woke up, I found it hard to fall back asleep so I basically laid in bed and thought about it for a few hours. Now I'm young (23) and a "newbie" to REI so I doubt I have come up with something that hasn't been done before but I was hoping to have everyone's feedback on whether or not this would be a good no money strategy.
Let's say I find a FSBO and negotiate a price based on other comps in the area, along with owner financing. From there, I go to my buyers list (which I still need to get working on) and say I have a house I will rent you. My payment to the original owner is $500/month. Can I charge a 2-5K down payment and $700-$800/month from my buyer and make the profit in the middle every month?
L/O?
First of all I hope the wording is so everyone can understand what I am saying. Remember I am a newbie so I apologize if I have not been clear with my scenario. As I said before I doubt this is something new and I do realize that I could just pass this off to one of my buyers and it would be a wholesale but by renting and receiving those profits monthly, don't I stand to make more money in the end? Also, if this is a good avenue, is it too risky? Any advice/feedback on this scenario would be greatly appreciated! I thank you in advance!
Here's to everyone's success,
Brent
I'm pretty new to this as well, so I apologize in advance if I'm wrong or I misunderstood.
I think it would depend on a few factors. You mentioned you would obtain the property through seller financing. Do you have the money for a down payment on hand to begin with or are you planning on using 2-5k you'll be getting from the buyer as a down payment? If you don't have the money on hand and are planning on using the buyer's money, I may be mistaken, but I'm not sure you can legally collect money for a property you don't actually own in some way. Again, there's a very good chance I may be wrong, so please double check before you take my word for it.
Secondly, I suppose the likely hood of your idea working would be highly based on the type of buyer you have.
In Christ alone, I place my trust.
Correct! I was planning on using the buyers money as the down payment, although I have the money. I guess that's a contradiction on the the investing part of Real Estate Investing huh?
It's called lease option,and it;s not new people are doing it everyday and it;s legal.
http://kendrickpropertymanagement.com/
http://rochesterapartmentrentals.com/?page_id=10
your seller, then more accurately it is called a "sandwich L/O". If you actually have the seller finance the house, then it just called a L/O as mentioned above. I have been doing both for a very, very long time and it is legal as long as you write up your contracts correctly.
Always Looking to Acquire Houses | Always Looking to Amaze Investors
Thanks James and Bill!
you got it! you usually use this strategy by looking up properties that have been on the market for a long time, or expired listings (i.e. motivated seller); on the other side, you have a buyer who cannot get a loan with a bank, so he will be willing to pay a little more for the property in exchange of you leasing it to him with the option to buy.
Wishing you success,
Valerie
Valerie
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When using the sandwich lease option strategy one of the key items to have in the first contract with the seller is to have the ablity to sub lease the property to your end buyer. You will need to make sure this is a option in order to make it work
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