Anyone had any luck with plain ol options? seems like it cant work, wondering if anyone had any positive results.
JP,
I’m not really sure what you mean when you say “plain ol options”. When someone buys an option, they are buying the right, but not the obligation, to purchase a property at a given price (or formula for price). I’m not aware of any real estate investors who simply buy and sell real estate options, although I suppose it could be done.
Most real estate investors use lease-options in which a lease is combined with an option to either buy or sell a property. I have bought and sold via lease-options and am very familiar with these techniques.
A popular seminar topic is ‘sandwich lease-options’ or ‘sandwich leases’ for short. In a sandwich lease-option, the investor leases a piece of property and buys an option to purchase the property. He then leases the property and sells an option to a buyer, hopefully at a higher lease rate and option price (strike price). I consider this strategy to be extremely risky and have personal knowledge of people who have gotten into trouble doing these. What I’ve seen happen is that the buyer of the lease option decides to exercise his option to buy the property from the investor. When the investor tries to exercise the option from the original buyer, the original seller refuses to sell. This can occur for many reasons. The seller may find out that the investor is making a bunch of money. The seller can change their mind for sentimental reasons. Whatever the reason, this puts the investor right in the middle of two mad citizens, who BOTH may decide to sue the investor. Even though the investor hasn’t done anything wrong, he ends up fighting two lawsuits and loses his butt in legal fees - even if he ends up winning. For this reason, I don’t do sandwich leases.
Typically, the only time that I buy using a lease option is when I want to control a property immediately while I’m working out the financing for it - in other words, very short term.
So, if you have any specific question, I’d be happy to answer it.
Hope this helps.
Mike
Oh wow see I thought options such as lease options and sandwich leasing were safe widely practiced methods. See I am only 21 years old so my first home purchase will be an investment, I have never been through the home purchasing process ever. I have read a bunch of books and know the terms, the philosophy behind the investing and think I’m ready.
I am looking for either wholesale deals where I can flip to an investor in a double closing, or dealing with pretty homes using lease options or another method of flipping. The reason is finding positive cash flow on Long Island is tough from what I heard at the Trump Seminar I went to this past weekend.
Any suggestions, comments?
<<The reason is finding positive cash flow on Long Island is tough from what I heard at the Trump Seminar I went to this past weekend. >>
Actually, had you been listening, you would have heard that here in this forum at least 4 or 5 times…I personally told you that twice.
Keith
I’m sorry?
A number of experienced investors in this forum told you, based on the numbers you provided and just general knowledge of the Long Island/Metro NY areas coupled with the exorbitant NY taxes, that you would have trouble with cashflow.
Luckily, you heard the same thing from the Trump seminar and it ‘stuck’.
…and you’re not really “sorry”, just a little young and exuberant! I actually have some hope for you.
Keith
Yea my goal now after the seminar is to Wholesale homes at a double closing to rehabbers. I am in the process of compiling a buyers list that will have 10+ buyers on it that are actively looking for homes. Then I will start to run around and check out homes that are UGLY! I have found two websites, one at yahoo real estate and the other at newsday.com that give comps based on recent home sales.
Combined I think I could use this to make my first deal, hopefully 5k+ then use that money to start my advertising and marketing.
Whatcha think? Any advice/opinions?
For a new investor, I think this is a better ‘track’ for you…it will allow you to get out and see property and get a better appreciation for its local value, it will allow you to build some capital, it will help you make contacts, it will get you familiar with terminology and REI business practices, etc., etc., etc…I personally think this will give you a much better REI hands-on education.
Keith
Thanks! See if I had rushed into this earlier I would have made mistakes!
So I’m glad I FINALLY get your approval. I hope it works, any recomendation on how to grow my buyers list for cheap?
LOL…you don’t need MY approval! I’m just trying to save you from what we called in the Army a “self-inflicted sucking chest wound”!
Keith
No I know it jsut seems as if you have your head on straight with stuff and are always looking out for the others.
So you got any good methods of obtaining buyers for my buyers list? I basically am looking for people interested in doing constant Rehab jobs regardless of location as long as the #'s work. This way as soon as I find a home I can send out an email list to all of them and hopefully one would purchase it.