OfflineI have been with DG since Jan. and have completed my first deal. We (me and dad) have been new home builders for several years, but as you all know that has NOT gone well lately. My dad saw Deans commercial and we joined up and it has opened up a new world in real estate for us. Our first house was an estate sale bought for $50,000 rehab cost $20,000. We had a contract 2 weeks ago for a lease/option and we still have 2-3 more days before we are done with the rehab. We're getting $3,000 down, $850/month and $90,000 purchase price. The folks say they will be able to purchase in 2-3 months. The second house we just started rehabbing and we will sign a contract for lease/option this week. REO purchase price $49,900 estimated rehab @ $20,000 probably less. Will get $3,000 down $900/month and $95,000. We are excited about real estate again. We are even building a new house on a lease/option for a couple who are coming out of a bankruptcy. My mortgage broker says that they are able to purchase a year from now. We are glad to be able to help people and make money at the same time. Thank all of you for the comments and info on this site. I have started a group for people who might be interested in networking or investing in Chattanooga, TN. and northwest Ga. Any helpful comments or advice is appreciated.
First Two Deals
Posted on: Mon, 04/25/2011 - 02:16
Great job! Can you explain the whole idea of a lease/option? And why someone would consider using one? And when should an investor use it?
Keep up the good work, and let us know your progress. It's great to hear about your success, esp. doing lease options. I like to see the excitement in these success stories.
But, I'll give you my 2 cants on the subject. A lease option is when you buy a house for a period of time on payments (usually 1yr. to 18 months), then you excercise the option by getting a loan with a great lender and the house is yours. This option works great, if you're working on getting your credit outta the toilet and you want to own a house but you've been told by a typical bank they say "no".
A Sandwich Lease Option is Basically a Lease Option on a house, x's 2, and other exit strategy. :-$
You lease a house from a motivated seller with the option to purchase at some point down the road, usually within 3 to 5 years. Then, you Lease the same house to a tenant buyer (TB for short), for 1yr. to 18 months. You get the new TB to do a down payment with you. With that, you pay the original seller your down payment (if required) and anything left over is yours to keep. The whole year or so they make payments on the house, and whatever is left over from the mortgage payment or monthly payment to the seller if there's no mortgage, is yours to keep. So, you make $ in the front, middle, and at the end when the house sells, like a burger or a "sandwich". When that year or so is up, the new TB exercises their right to buy, and buys the house from you. At any time during that year, they can buy the house, too. The down payment and the portion aside from mortgage payment (your monthly profit) gets applied to their purchase amount as a credit. So, the original seller gets the house outta their name and/or money, you get paid off at the end, and the tb owns the house. It's better when they own the house free -n clear, as you already know.
An investor can use this option when there's equity or when there's not any equity , not enough equity or the house is slightly over/under and the seller is motivated. The homeowner HAS to be motivated for this or any rei strategy to work out. It gets them out of a bad situation, and it works well if they are going into pre-foreclosure.
Way to go kevin!! I used to build with my dad also! !! I bet you guys make an awesome team.I am sure you will keep making deals now that you have seen how fantastic it is helping others while getting pr AND racking up experience.well done
Jay
Click Here For homepage www.jaysthilaire.com
need to sell ? http://www.jayhousebuyers.com
Need me to FINANCE a home ? http://www.jaysrenttoown.com
CHECK OUT MY JOURNAL http://www.deangraziosi.com/real-estate-forums/investing-journals/20063/...
Thanks for the info! This sounds like a great option to keep in mind! Where did you learn that from?
Reading both of Deans latest books, reading Wendy Patton's book on lease Options, and tidbits from DG.com posts by Karen, Michael M. & other experts. I also learned a little by watching youtube videos, and checking out topics on the subject at REIclub.com. Once you put all the info together and start trying it out, everything will fall into place.
...Congratulations for sharing your deals with us. It is always exciting to hear about deals and what people are doing to create deals. Your post gives others inspiration that there are many ways to make cash and lease options are just one way. Good luck on your future deals and keep up the good work. Believe and Achieve!
- Joe
YOU TUBE CHANNEL - Follow me on my You Tube Channel at Joe Jurek Real Estate Investing Adventures
https://www.youtube.com/channel/UCiko62V79zLKX_owbirAYNA
TWITTER - Follow me on Twitter at Joe Jurek CPA
Joe Jurek CPA
https://twitter.com/JoeJurekCPA
What an inspiring story to share with everyone.
It sounds like you have your creativity and thinking outside the box working for you. This is what it takes in the investing world today!
There is no stopping you and your dad.
To Your Success!
Laura
BMW Investment Properties LLC
www.bmwinvestproperties.com
Thank you all for the encouragement. Hopefully there will be many more successful deals ahead.
Thanks for sharing the details of your transactions with us. Congrats, well done. God Bless.
Sandra
"You can never get to the top, if you are not willing to climb. Do not look at the difficulty of the climb, only anticipate the view from the top."
"Can't even walk without you holding my hand." (Song)
"Is anything too hard for the Lord ..." Genesis 19:14
"In all things, wait on the Lord."
"Think not of your own deliverance, but trust in God who will give in abundance."
"When you are down to nothing, God is up to something." Unknown
"Our lives begin to end, the day we become silent about those things that really matters." Dr. Martin Luther King Jr.
My wife and I just came home from our 3 day weekend training in Orlando,
whowhwowhowooo, we just got the weekend of our life, the teacher and the staff were the Best, all the ideas, all the information was just over far and up our expectations, thank you for care about us, our future.
A+ nothing else is what we can say.
Now you just give a way a gold piece of information in your blog for free that just cost me lots of money. jajajaja lol
Not a all, thanks for the blogs, thanks for all the free information you share with us.
God Bless you.
Hey Kevin,
Can you tell us about your mortgage broker and how you qualify your buyer?
Thanks.
Obviously there are many people who have run on hard times. Others may not agree, but if they are willing to meet with my mortgage broker, work on rebuilding their credit, especially to the point of hiring a credit repair specialist, put non-refundable money down up front, then I think they are serious. My mortgage broker checks their credit score and their financial ability to pay. If they can afford the house payment including taxes and insurance with what they will be paying me in monthly rent, then they can have the house. I don't want them in over their heads when they buy the house. We set the lease for how long it will take them to repair their credit. Hope this helps.