Changing Perspectives: How To Buy and Sell Houses For More Profit

I’d like to ask one question. If you were able to sell your home at 30% or more money, do you think you would? Sure, you would. It’s a simple answer. However, do you really? Perhaps not. In this article, I’m going to talk about the numerous strategies that lease option (shortened by “LOs”).

Why they’re so amazing in the event that you can get it all to work. I’m not going to go too deep into the details of the workings of LOs their own, as in the near time, I’ll be writing an extremely detailed article about the exact same thing (practically an instructional manual).

However, for now, I’ll go into detail enough to let you experience the value of looking at issues “differently” than most other investors. You might be amazed by the solutions (hint that they aren’t unlawful, morally imprudent or overly complex).

What’s So Great About Lease Options?

The most appealing aspect of LOs can be their flexibility. Since they are based upon “terms,” meaning the terms of the contract you have put together, they’re not the same as deals like wholesale or fix n ‘ flip. This is a good thing since you are often in control of the property, so you are able to customize the deal what your contract (terms) permits. This doesn’t mean in a conniving manner, however, you are able to be as imaginative as you wish to provide the seller precisely what they want and ensure that the deal is beneficial for all parties.

It’s important to note that in all the examples I’ve provided, I’m using the national average figures. Your market might differ, that’s why I’m providing you with an Excel worksheet to save yourself and fill in your personal numbers. It is true that the numbers will be significantly different in, for example, San Francisco or New York. But one thing to be aware of is that if you reside in the areas mentioned above there is a way to be a part of REI without investing any of your own money, simply saying…

Okay, let’s dive into the details of this, how can this generate more revenue? A photograph can be worth 1000 words. Therefore, in these cases, I’ll present an analysis chart that breaks everything down. The first chart will show an illustration of the differences between selling a home using an Realtor and selling a house by LOs. As you’ll see below, since the majority of the commissions and fees are not necessary with an LO, the buyer is able to earn more.

The smarter flipper

You might be able to (and numerous people do) flip one home every 90 days and earn an acceptable profit. Or, you can flip fewer deals (less time to work) and earn much higher profits (more time off). The basic concept is, you flip the deal in the same way, however you cash out refinance the property that you just flipped and then sell it.

Then you get the HML (HML) and rehab expenses completed, and you take some money from the TB. It is five percent of the eventual house’s value that is $242,000 (national average of $200K plus 10 percent appreciation every year) that is, you will receive an amount of $12,100 when you close (you could sell it if you have an investor move in on the closing of your refi).

As you can see from the below chart, I chose to use extremely generous numbers, with an HML of 100 percent LTV with rehab at 2 points and 12%, which means you have no amount of money you own in the transaction. It is possible to get this by partnering with a Private Investment (if it’s possible) however, it happens only very rarely do you get it with HML.

It’s into the mix to demonstrate the difference that leasing optioning the home is, even with incredibly favorable conventional flipping. It’s possible that you won’t be able to perform every flip this way if you require additional capital on a regular basis which is why you might make the “regular” flip, get 35k (if everything goes well). Then flip to a lease option the next flip.

Moreover start with 12K and switch back and forth until you are closing the LOs within a couple of years later and receiving those massive pay days. Then you can perform a couple of flips per year, until each begins paying more than $100k. You decide how to make it work for you and your requirements. I’m here to inform.

“The Smarter Flipper” Comparison

“Assign It Back” To the Seller Another alternative we offer sellers is to take on the work of supplying an TB that is qualified. And then assigning it to the seller without cost directly to the buyer.

We take our commission on the basis of the fee for each TB (average of 4%) that the seller subtracts from the HUD-1 at closing. The seller was expected to be paying the Realtor 6percent, plus buyers frequently ask for concessions or lower prices in the majority of marketplaces today.

I’m charging 4%, and the TB does not ask for any of the typical concessions, and they’re getting an entire market value for the home when it is sold in the near future. A tip: I also employ this image to inform sellers on why it’s preferential to hire my business to offer them a qualified TB and then assign the LO contract to them, instead of selling through an Realtor in the event that they’re able to make it themselves (i.e. don’t have to cash out immediately however, they can do so later).

Assign The Contract Back To The Seller

“But, I’m Just Getting Started …”

Perhaps this all seems to you a bit confusing. You’re still not aware of LOs yet, and are hesitant of taking a risk. But what if you just advertise for TBs for sale without any marketing expenses or pre-qualify them through another system. And let the Realtor complete the job and still earn an income? Could that be something you would like to consider? This is how I make money from leads that were previously “dead” leads.

“Turning Dead Leads Into Cash” Information: Like I’ve said, I’m requiring the payment of 5% (the charge for the options) in exchange for any option leases I make.

However, most TBs don’t have enough money to deposit on a house. This was a problem that used to make me angry that I could not help them, but then was Home Partners of America.

Real Estate Agent

The good news is that I still can help by introducing them to an agent that works together with Home Partners of America (HPA). If they are eligible through HPA and HPA, they are able to get lease options through HPA for just two months’ rent as the cost of the option, around 2 percent. This can be beneficial to sellers as well since HPA actually purchases the house and leases for the TB.

If sellers are unable to be patient waiting for their next payday this is an excellent option. Especially if your home is eligible. HPA is more stringent about what they will buy than I am due to the fact that they are buying the home and I typically offer sandwich leases. The Realtor offers me a marketing fee in exchange for having a qualified TB – between 17.%-25 percent of their commission. It could be the whole 6 percent in the event that the listing agent is aware of how to collaborate with HPA and is able to represent both sides. This is a fantastic selling aspect. It’s averaging of between $750-$1,500 (split as well as full commission) on the average national cost of selling a house of $200,000. It’s not bad for little effort than referring someone that whom you did not initially think you could assist.

This is a high-volume and lower cost strategy that needs only a small amount of time to prepare to prospective tenants. In the same way the marketing cost for TBs are zero as I utilize Craigslist, Facebook Marketplace (not advertisements) and local newspapers for free. All I require and I am able to get lots of TBs. However, I do have a CRM in place to collect all the information about them. And sort them out follow up with an VA follow up with them. It was a bit of setting up work initially and now it lets us concentrate more on those tenants who have met our requirements to lease our options.

For Wholesalers of All Types

Speaking of turning dead leads into profit Who else might have several dead leads who are unable or won’t give discounts on their homes. However still wants to sell? Wholesalers, you’re right (good idea). I have come across many wholesalers who solely focus on wholesaling. Although there’s nothing wrong with this however, I do am working with them to determine those that could benefit us. They just pass on the information of the seller to us. If it’s a deal I give them 25 percent of our 5percent option fee, that’s about a $2,500 average referral fee. The wholesaler is satisfied and, after a few of deals, typically is eager to learn more about leasing options.

wrapping it all up: Hopefully you see the ways lease options can be an amazing tool for making numerous deals come together.

Or to earn more money on deals you’re already working on. They’re not for every deal, of course but once you’ve learned about these options. They’re an extremely useful tool to your disposal. Do not hesitate to comment and ask any questions regarding things you’re not sure of. I’m always happy to help.

Common Objections:

“LOs are illegal in my state.”

This is not the whole truth. If you call them LOs which is a possibility, they might be viewed as illegal. But the fundamental principle behind an agreement arrangement “equates” to a LO. In Texas or North Carolina, it may require to be structured as an owner-financed deal. As opposed to leasing options, however the fundamental concept behind it is the same with different terms. This is the reason why you should hire an attorney to facilitate the formalities. Do not refer to it as an option to lease, but describe the terms of the contract and let the attorney handle the work they’re paid to.

“I don’t need to do LOs, my fix and Flip Business is going just fine.”

I discussed this earlier and as you’ve seen that you could make the same amount each year by doing fewer flips. Or the same number of flips but significantly more money.

“I don’t understand LOs”

Learn it. Take the time to find an instructor locally. Visit your REIA meetings, discuss LOs and observe who is pumped up. Learn the fundamentals through BP or YouTube and begin there. Begin to become familiar with the basics until you’re ready to take the next step. Don’t count them out Now you know the reason.