Hey Folks Billobiz here again, bringing short but valuable content. Just wanted to talk about my favorite strategy for real estate investing and why its a great way to get started in real estate. There are so many ways to do a real estate transaction but this one seems to be the quickest way to start making money with little to no money out of your own pocket. Disclaimer: IT DOES TAKE ALOT OF EFFORT! Im not going to sugar coat it and say its easy. if it were easy everybody would be doing it. However nothing worthwhile is easy so give it your all.
This strategy is lease options AKA rent to own. Im sure you have heard of this term before but most people dont seem to know how it works, and its really not complicated. First you start by finding a homeowner who wants to sell or rent their house. Usually on craigslist or Zillow or forsalebyowner.com. There are other sources if you do your research but these are the top sites to start prospecting. You then have to qualify them by finding out if they are willing to rent their house for 3 to 5 years and then selling at the end of the lease term. If they agree you then start to put your sales skills to work and eventually close your prospect. First you want to ask them questions about the property to find out the condition and see what price they are willing to sell at. Usually these types of sellers want full market value for their property which is perfectly fine because we arent concerned about getting huge discounts with this strategy like you would if you were doing a fix and flip. Obviously a discount is good but thats where negotiating comes in.
Once you have agreed on price and terms and terms referring to the monthly payment, amount of money down, and the length of the lease term, then you get a contract completed. Heres where it gets exciting! The best part of this strategy is "Assigning" the contract. That means you put the property under contract which gives you marketable interest in the property which gives you the right to market for another buyer. By assigning you are selling your position in the contract and the new buyer that you found is the one who brings all the money to the table leaving you to profit without putting a penny into the deal. For example: Lets say you agree with your seller that you will pay them $5,000 down payment. You then find a buyer to bring a $10,000 down payment and now you just made $5,000 profit. From this point you can do one of two things. You either get out of the deal and take your $5,000 or if you negotiated with your seller a 5 year lease term you can then lease to your new buyer for 3 years all the while helping them with resources to improve their credit so that at the end of the 3 year lease they can refinance and actually buy the property. Before this point you would have also negotiated a monthly rental payment with your seller. For example you negotiated $1,200 per month with your seller and a purchase price of $150,000 you would then have your buyer pay $1,400 per month and a purchase price of $160,000. So know you have created 3 profit centers for yourself! The profit on the down payment, the monthly cash flow in the middle, and an additional profit when your tenant buyer exercises their option to buy. Pretty cool huh!?!
This is my favorite way to do real estate deals and not put a penny into the deal. Complete leverage. I hope you found this helpful in giving you some direction for getting closer to financial freedom. If you found it informative and would like me to make more posts like this then please upvote this post or any of my other posts and follow me as I will be coming out with exciting new content about ways to achieve financial freedom every week. Also If you have any questions on this topic then feel free to post them below and I will try to answer them as quickly as possible!