Easy Steps to Wholesale Lease Option Success for Real Estate Investor

Real estate investors are challenged to stay up-to-date on industry trends in order to deepen your portfolio, stay relevant, grow your business and continue to make a profit. One trend that continues to offer success is the wholesale lease option strategy for real estate investing.

What is the Wholesaling Lease Option?

The wholesaling lease option combines two effective real estate investing strategies that when joined offer a quick and easy way to make money. Not only that, but the wholesaling lease option works effectively in both hot and cold real estate markets. This is a great tool to keep in your back pocket to supplement your real estate investing business.

The first part of the wholesaling lease option is wholesaling. Wholesaling for real estate investing is when an investor enters a contract with a seller but doesn’t intend to actually purchase the property. Instead, the investor acts as a connector to a buyer. The investor uses their network to locate a buyer for the seller’s property. Once a buyer is found, the contract is assigned to the buyer and the investor is paid an agreed to portion of the sale’s price.

The second part of the wholesaling lease option is a lease option to buy. The way a lease option to buy investment deal works, is the investor enters a contact with a seller to lease the property instead of purchasing the property outright. The terms of the lease agreement include an option to buy the property for a specific price within a specified timeframe. The timeframe is usually within two years.

The wholesaling lease option works by combining these two strategies to allow the investor to act as a go-between to find a buyer that will lease or rent the property with an option to purchase the property. The seller enters the contract with the investor with the terms defined to pay a portion of the down payment or deposit from the buyer or renter to the investor.

Why the Wholesale Lease Option Works

The wholesale lease option works well because it doesn’t require financing to close the deal. Also, the risks for the investor are lower with wholesale lease option deals because the investor never takes possession of the property. Instead, the investor operates more like a real estate agent to locate a buyer.

The wholesaling lease options work well regardless of current real estate market trends. When the real estate market is booming, it’s a great way to help buyers locate properties where they don’t have to finance the entire deal upfront. This is beneficial in a hot real estate market where property prices are higher and down payments larger.

When the real estate market is in a slump, this strategy also works well. It can give the buyer a chance to use the property under the lease option without having to purchase the property. The buyer has more time to see what the real estate market will do before they buy. However, the purchase price is already defined so that if they market improves, the buyer doesn’t have to worry about the price increasing.

Overall, wholesale lease option deals are a win for all parties involved. Don’t miss your opportunity to make a profit with this effective and easy real estate investing tool.

Six Steps to Wholesale Lease Option Success

1 – Locate a Seller – For any real estate investing deal to work, you have to find a seller. With wholesale lease option investments, you need a motivated seller. It’s often beneficial to find a seller with a tight financial deadline, like with a foreclosure. The seller must be willing to lease the property under and option to buy.

2 – Put the Property Under Contract – After you find the seller, a contract is needed to define the terms of the deal. Work with a qualified real estate attorney to ensure that your contract protects your interests. The contract must include a Lease to Buy Option with the timeframe and purchase price defined. Also, state in the contract the percentage you will be paid for finding the buyer and the timeframe to do so.

3 – Locate a Buyer – The key to the entire deal is to find a buyer to take over the contract. Work to locate a buyer who has the money to pay a deposit or down payment. Also, work with the buyer to understand if they will be in a position to purchase the property within one to two years. The buyer must be willing to lease the property with the intent to purchase for the deal to be a wholesale lease option.

4 – Sign the Contract with the Buyer – The buyer must sign the Lease Option to Buy contract to relieve you of your contractual responsibilities with the seller. The buyer now has the obligation to the seller to lease the property with the option to buy at the set terms.

5 – Deliver the Assignment of Lease Option Contract to the Seller – Your job is to ensure all contracts and paperwork are properly delivered to the seller. The Assignment of Lease Option contract must be given to the seller before your obligations are complete.

6 – Collect your Payment – Once your obligations are completed and all contracts are signed and delivered, your payment is due from the seller. The percentage you are to receive should be defined in the contract. After you are paid, the deal is finished.

Invest in Solid Strategies for Your Real Estate Investing Business

The key to success in real estate investing is understanding how to take calculated risks in order to make a profit. One excellent tool to grow your real estate investing business is wholesaling lease options. Be smart with your investing strategies by learning the best process for success for each type of investing strategy.

Also, remember that your reputation matters in this business. As you work with sellers and buyers, offer quality service, solid contracts, good communication and an organized process. With a great reputation your buyer and seller list will grow, which will make future deals easier.