is it possible to buy at 100% &

General Real Estate Investing
1

is it possible to buy at 100% of appraised value and then lease/option the property out and still make a profit when you sell?

I’ve been told it can be done, but have never been told how…

thanks!

2

Sure. You set the selling price on the lease option. You just need to set the price high enough that you make a profit. You’re betting on getting a price premium due to the friendlier terms. If you are in an area that has 4-5% appreciation and a 2-year lease option term then you markup what you paid for the house by 8-10%.

3

Yes it’s possible. When you sell on lease/option your option price should consider appreciation. For example you buy a house at 100K, if you sell that on Lease/option your option price should be more than today’s price. For example, if you did a 1 year option the price could be $110K which leaves you a 10K profit when they buy it.

4

yes, I understand that, but that kind of put’s you in the speculation market doesn’t it?

Your assuming appreciation. If you dont get that kind of appreciation you’re pretty much screwed right?

5

Good point. So to answer your original question, buying at 100% appraised value and doing a lease-option is speculating that your market will continue to rise.

6

thanks!

reason I ask is that I was contacted by a franchise (naba.com)
about their program…which involves paying reatail for properties. I just dont see how a franchisee can make money like that unless you live in a high appreciation area. check out their website and tell me what you think.

7

You could always NOT excercise your option to buy or even attempt to renegotiate. The longer the terms on your lease the more chance you have of appreciation. All property will appreciate over time, probably :wink:

8

You set the final selling price when you sign the lease option contract. You set it higher than the current price and justify it because of more flexible terms and future appreciation. Then you have to sell that idea to make the profit.

There’s also a huge assumption that you can get enough in rent to cover your costs and the 50% rent credit. I think you’d find it impossible to get that much in rent in many markets.

The program also opens you up to equitable interest where you have to foreclose instead of evict.