Can someone explain to me how to wholesale a lease option?
Great question…
I’m guessing you mean ‘assigning’ a lease with an option?
This is a situation where you find a motivated homeowner whom is ready, willing, and able to offer a lease/option in order to sell his home. You then offer to find him an Optionee/tenant/buyer for a fee.
Once the agreement is consummated, you collect your fee; exit the transaction; and let the Optionor and Optionee flounder around trying to figure out their heads from a hole in the ground on how to secure financing, open escrow, settle on inspections, do appraisals, draw a purchase and sale contract, negotiate fees and costs, set upper and lower limits on repairs, and much less qualify for a loan.
This is called, “a mess.”
It could be a mess if you don;t know what you are doing…
Lease options could be one of the most profitable techniques out there…
depending on the situation it may even be better than straight wholesaling.
Lease the property with the option to buy it in the future… 5, 10, 15, 20 years down the road. You assign the option to an investor for a fee. Off course the deal has to make sense… Let me explain, the property has to have
1:equity
2: cash flow.
Doesn’t matter if the property has no equity… If it cash flows, is a deal…
i assigned a property where the duplex cash flowed $500 bucks a month… it was fully rented with long term tenants. The only “problem” was that the owner owed $125k and the duplex was appraised at $115k
- I received my option consideration of $5k.
- the investor got a fully rented property for $5k without rehabbing, financing, or mortgage origination fees or qualifying for anything…
- The owner got away from a house he didn’t want to manage.
win win win… Learn lease options. It a great way to make money on deals most people would turn away from.
I know exactly what I’m doing. I’m putting a buyer and seller together and collecting my fee, and getting out of Dodge.
It’s the buyer and seller that don’t know what ‘they’re doing’, that’s the issue.
LO Assignments is all I’ve done for 10 years, and it is a great way to get started in real estate.
Our business and model is structured very specifically though, so the buyer gets into credit improvement, and the numbers are set to help make the purchase easier.
We also heavily screen our applicants to make sure they are a good fit, and we turn down houses that don’t meet our liking.
Do you mean, you want a buyer for your property to be sold through lease option route?
I like how Javipa does it, but I like to help the seller and buyer iron out all the details, I do let them go to Notary and record the docs and go over the contracts with an Attorney if they choose.
I tell buyers they shud make payments directly to the bank and tell the seller to check online to see if the payment has been made.
I have done 3 so far and negotiating to do my fourth in a few days.
There are so many houses still underwater here in Calif the LO is about the best way to get them sold.
you gotta have an attorney. the L/O is basically a long escrow. once, if ever, the T/B is ready to buy the attorney that executed the assignment and got your release from the deal, will close it. this is soo much more better than conventional closing. Javipa idea on escrow company is good, I just haven’t found one yet that will do L/O payments… however, if they don’t close, the seller has bought time and the seller is in the same boat they were in before, only with their payments being covered for 1-2 years and no maintenance costs. hopefully by then they realize it might not be that bad to do it all over again and pay down their mortgage on someone elses’ dime. if not- quoting our ever so brilliant ex-SoS, “what difference does it make”? unless the T/B trashed the house, the seller has bought himself time, just remember that… :beer
Actually, since posting, I found a couple. I needed to do it anyway, so I am happy this post came along.
for sandwich L/O I found escrowspecialists.com. they will handle 2 disbursements for 1 contract.
there is also this company escroserv.com, but I am not utlizing the Bond for deed or bond for title here in Alabama yet. both look pretty good. I like L/O and will use the escrow specialists for my upcoming ones…