Buying Real Estate with Lease Options

I’ve been a real estate investor for several decades. I’ve studied and worked with many investing methods. I’ve had success with various methods. Today, I don’t hesitate for a second to state that I am fully resolved that buying real estate with lease options is the fastest, easiest, and least expensive way of investing in real estate. And highly profitable.

Buying Real Estate with Lease Options is Fast, Easy, and the Least Expensive Method

Buying real estate with lease options is fast for a couple of reasons. First, there only needs to be two people coming to a meeting of the minds in the deal – you and the seller. Banks, brokers, escrow companies, and many others that are typically involved in a traditional deal don’t need to be part of a lease with the option to purchase. Some of these others might become involved if you decide to complete the purchase. However, by that time, you already have control of the property and a contract in place. All that is remaining for the others to do (down the road) is complete what is already spelled in the contract.

Buying real estate with lease options is the easiest way to invest. Fast often leads to easy for the same reasons. Keeping the people involved to a minimum. But it’s also easy for the investor because he or she has an out if the deal doesn’t work well. That’s the “option to purchase” part of the deal. It’s easier to enter a deal when you know that if your exit strategy isn’t going to work, you can walk away with little or no financial commitment.

Buying real estate with lease options is the least expensive method without a doubt. You gain control for a small or no option fee. With the sandwich lease option, you immediately collect much more in the second option fee than you paid (if you paid anything). It’s not only the least expensive, it’s profitable from the very beginning.

Buying Real Estate with Lease Options Brings in the Most Potential Buyers

The advantages just keep rolling in when buying real estate with lease options. Don’t underestimate the importance of having more potential buyers. More potential buyers mean more profit. It now includes buyers that are on the cusp of qualifying for a mortgage that other sellers won’t even talk to. It replaces the adversarial relationship that often develops between a traditional buyer and seller when it’s only about money – you’re offering what others don’t offer. Your end buyer now enjoys a nice home without the immediate hassles of qualifying for a mortgage.

However, as the investor, you certainly don’t get the short stick. A few of the advantages you gain are:

• A top sales price from the end buyer.
• Positive cash flow.
• The largest list of possible end buyers.
• Minimum risk because you're not the owner on the title.
• No commissions or fees.
• No maintenance (the end buyer is responsible).
• A large non-refundable option deposit.
• A big profit when the home sells.

Buying Real Estate with Lease Options Combines Strategies

Investments are based on one of two strategies. One is buy and hold long term for the cash flow. The other is buy and flip for a fast profit. Buying real estate with lease options is the best of both worlds by combining the strategies.

The lease side is essentially a buy and hold strategy. You may not have bought the property outright but you do control it during the time of the lease. This entitles you to the rent profits as if you did own it. Also similar to buy and hold, you gain the appreciation in value when you sell in a sandwich lease arrangement. Even better, you accomplish this without the risks and responsibilities of actually owning the property.

The combination also comes with the flip advantage. Basically that is exactly what you are doing by flipping it up front to an end buyer for a profit at the end of the deal. Obviously, their option to buy - for a pre-determined price - is a huge part of the deal. It’s your biggest payday. It doesn’t get much better than having the advantages of both strategies - buying and selling PLUS collecting rent by holding the property in your portfolio.

There are even more benefits to buying real estate with lease options. Without a doubt, you now understand why I am fully resolved that buying real estate with lease options is the fastest, easiest, and least expensive way of investing in real estate.

By Wendy Patton