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About - Mike Jacka
Real Estate Promo, Inc.
2675 Stillwater Rd E
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Real Estate Articles
IS LEASE OPTIONING TO BUY REALLY
A TECHNIQUE THAT WORKS?
by Louis Brown
Satisfied Customer
... Just recently one deal of mine has paid for the "Whole Enchilada."  Not to mention the deals I've done where your information has saved me money and headaches.

I had a tenant which moved into a house under a Lease/Option.  The information which he put on his application indicated that he and his daughter were the only occupants of this house.  Within the first 3 months he moved in two additional people which he claimed to be a "temporary" situation.  Since I used your lease agreement with the special clause requiring additional rent for unapproved residents, I have collected an additional $2000.00 in rent during this year from this one tenant.  He has 2 months left on his lease and I don't foresee his "guests" moving out soon.

Once again let me thank you for providing invaluable information for Real Estate Entrepreneurs.

Sincerely,
Rose Marie Wallace
Reliance Home Trust, Inc.
Windermere, FL
Remember back when George Bush - George W. Bush’s father - was running against Bill Clinton for President and the media made a lot of hoopla about how Bush was focusing his campaign on the wrong things. The headlines read, “It’s the Economy, Dummy!”. As Real Estate investors we know that the more skills and ways of buying we have the better we do when we are before a seller. Sometimes we focus on the seller based on how we see the world and not what is important to the seller. It’s NOT always the economy, dummy!! Many times the sellers last concern is the financial terms of the deal. In such cases they are more concerned with just being rid of the property due to things happening in their lives. Sometimes the facts don’t allow a conventional deal. The debt on the house may be too high. They may need a really quick deal, which doesn’t allow for a financing delay. Whatever the case it really doesn’t fit with many of the typical purchase scenarios. Too often we think for the other guy. STOP THAT!! IT IS COSTING YOU BIG MONEY!! For example, one of my favorite ways of buying is with a Lease with Option to buy. I usually include a lease option in most of my purchase scenarios when I am discussing buying a house. You might say, “Who would do that?” “Louis, are you saying that people will give me control of their property, let me put a tenant in their property whom they have never met, continue to be liable for the loan and not even get a big down payment from me?” YES, that is exactly right. And they will do it happily, just to be rid of the property. Now I am not saying that you can just bounce the idea off them without having the proper responses and the proper paperwork. You must look like the professional. You must be able to represent that you have the ability to sustain the payment if times get tough. You must convince them that you have the management skills to find and manage your tenant. Once they have this comfort, they will sign your deal. 
  
One caveat: you must live up to your commitments. Just because you get in light, don’t let that be your reason to take the easy way out when you have to carry a vacancy or replace some carpet. You must be committed to the notion that you have received a special gift. The owner trusted you to deliver on your promises. Don’t let them down! Don’t wreck their credit because things didn’t turn out the way you had envisioned. If you can’t handle it, bring in one of us who can save it. Why am I saying all of this? Because I am giving you a special gift which potentially can make you a pile of money. I expect you to treat it like a gift. Deliver on your promises. Bad press about this technique can ruin it for all of us. Sellers will be more suspicious and will shy away from this marvelous way to handle their problems. Do your part to enhance the integrity of Real Estate investors and this technique as a low effort, low risk, and sensible solution to tough problems.
  
So on your next deal one of the offers that could make a lot of sense is to offer a long-term lease with the option to buy. I typically offer five years with the right to extend for an additional year. I explain that I need this long because it sometimes takes this long to get someone qualified to buy the house. In class I cover a lot of real life examples. I give you the tools and techniques to make it work for you and cover the scenarios to do it in. I hope you can make it to one of our boot camps.  If you can’t, just remember that Lease Optioning is a high leverage, low risk deal for you that can return big bucks.
Copyright 2004 Street Smart Systems
 

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