Feb 252024

Beginning a hobby or career in real estate investing doesn’t have to be so
complicated or such hard work if you will only begin with what you have, right
where you are at this moment.

Look for someone who really needs to sell their home and solve their
problem. One of the fastest solutions if they are about to lose the house is to
take over their payments on a subject-to contract. By giving them some
walking money, they can afford to move and still have the cash to rent another

Then, clean up the property, lease it out to a future buyer on a rent-to-own
basis which is called a Lease/Option. You get to collect an up-front, non-
refundable deposit. Three to five percent of the future purchase price is a good
figure to shoot for. You can actually do this every month and make some
additional cash, or concentrate on this method as a full time lifestyle.

Have the renter/buyer sign a contract. You pocket the difference between what
you’re paying the original owner and the amount you’re collecting from the
new renter/buyer. The spread is higher on nice, expensive homes in great
neighborhoods, so don’t be afraid to search in these areas.

This is a good method of collecting extra cash flow every month. There is no
limit to the number of these deals you can do other than your time and effort.

Call on every ¡°For Rent¡± ad in the local paper and just ask if they would be
willing to sell the property in a couple of years if you sign a long-term lease. If
you get a yes, negotiate a fair purchase price, sign a contract and find a
renter/buyer. It really is that simple. Of course, you want to have a lawyer
check out the contracts on the first deal to protect both parties.

Try to get at least $150 more per month than you are paying. Also get a
minimum of $1000 above and beyond what you have paid out as the option
deposit. You don’t want to be working for free, do you?

Let’s look at some figures from actual lease/options. A couple were behind on
their notes because he lost his job, and she didn’t make enough to pay all the
living expense. The stress was causing marital problems and they wanted to
sell, but the house stayed on the market for six months with no takers.

They were getting desperate when a neighbor mentioned the situation to her
church group. One of the group’s members had a son who was looking for a
house that could be leased with an option to purchase in a few years. He and
his wife didn’t have a lot of money for a down payment, but they knew that
buying was better than renting.

After looking at the property, they decided it would be a perfect first home if
they could manage the financing. The couple offered $1000 as a non-
refundable option deposit, if the current owners would give them two years to
qualify for a new mortgage. The timing was right and the current owners
accepted the offer. The monthly payment they agreed on was $200 less than
similar house rentals in the area.

Both couples were happy and they signed contracts for the deal the next day.
The new couple didn’t even move in. They saw an opportunity to make some
quick cash and a good monthly cash flow, so they lease/optioned the house to
another couple for $5000 down with payments that were $300 above their

If this new couple closes on the deal in 1 year, they will have earned $5,000
up front and $3,600 over the course of the year in monthly cash flow. By the
way, the sales price was $12,000 higher than what they had agreed to pay the
original owners. Added up this equals $20,600 for just a few hours work.

These deals exist in every town in the world. You can do these until you build
up your bankroll and monthly cash flow. There are no geographical limits.
Travel the world doing deals, living where you please and life is no longer on
a budget.

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