This technique has been used for some time, but it is still relatively unknown among investors. In principle, you rent a property with an option to buy & 39; and rent and then go back to somebody & 39; d & 39; one another, including the granting of & 39; & 39 ; & 39; an option to buy them. Your rent is higher than you, of course, and the purchase price & 39; is a sandwich well.
A lease Example
You find that the seller has a number of problems in the sale of his house. He has already moved and & 39; n has no immediate need to make it compulsory for sale. He wants $ 132,000 for his house. They offer on the lease for two years at home, if it is also an option for the purchase of & 39; $ 132000 n & 39; at any time during those two years. He appreciates the fact that you are in full price.
You honestly and openly with him about your intentions. You say you intend & 39; l & 39; a pair of things to improve and sell at home for a win. They want to reserve the right to the information & 39; like home. Here are the terms that you have finally agreed
-The selling price is $ 132000 - if you buy.
Do you & 39; option to pay an amount of $ 2000. & 39; It is not refunded if you & 39; did not buy the house, but on the purchase price & 39; if you do.
you pay rent of $ 1200 per month (going rate).
-$ 200 for each of the rental payment on the purchase price & 39; if you buy home.
-You are responsible for the first $ 100 of repairs needed each month. This means that the seller & 39; n is not usual, some headaches, a landlord.
For in & 39; interest of this example, it is assumed that you are doing this in an industry where prices & l 39; real estate rising rapidly. Here, the technique is better. If you have a list of buyers that you are already in contact with it works even better. Ideally, you want to have rented the place today, that you have on your lease, so you have not & 39; n of & 39; operating costs.
Your buyer seeking to rent space because it may, by his company. He wants to buy if it does not relate. You have done for him. Below are the terms you negotiate:
-The selling price is $ 142000 - when he buys. They explain that the current pace of development, the house is paying $ 150000 in two years, c & 39; is to say when he will probably buy it. Of course, it is not & 39; n d & 39; have to buy & 39;. One option is the right, but not a obligation.
it will pay an option & 39; an amount of $ 4000. It is not reimbursed & 39; s & 39; n & 39; he is not buying, at home, but on the purchase price & 39;, it & 39; s does.
-Il pays rent of $ 1500 per month.
-$ 300 payment of the lease is valid for & 39; purchase price.
- He is responsible for the first $ 100 of repairs needed each month. This means that all the expenses which, in addition, the seller of your lease contract.
The period must be the same or a little shorter than yours, of course. Now, we look at the possibility of outcomes.
First particularly those from leasing contracts & 39; n is not uncommon in some areas of Florida, Arizona and California. Investors experience of these places was that often the tenant not to buy the property. What happens then? & 39; N
You have no obligation to buy & 39;, either. So if your tenant has not & 39; n l & 39; exercising the option, we can also lapses. But where do you stand financially? They paid $ 1200 per month, the pickup and $ 1500, c & 39; is to say after two years, you have collected $ 7200 to win. You lose your option pay $ 2000, but has maintained a fee of $ 4000 collected another $ 2000 in your favour. The owner pays the insurance and taxes, and the tenant of & 39; supply of & 39; company, so you had not fundamentally costs.
Your total profit was in the vicinity until 9000 to & 39; $ & 39; if the property was leased at the same time, you signed your lease. They had a temporary surcharge of $ 3200 cash for & 39; option fee and the first month& 39;s rent. But your landlord you a $ 4000 option for & 39; pay, plus $ 1500 for the first month of rent. If you had a cash advance on a credit card for a month, it will cost $ 40 or less & 39; interest, it makes a deal.
What you have not & 39; n d & 39; money, if your tenant buys at the end of two years? Your fee of $ 2000 plus $ 2400 for rent - $ 200 x 24 months - & 39; s & 39; applies to the purchase, you need $ 127600 to close ($ 132000, less credit points) . Your buyer is credited with $ 4000 for the option, plus a supplementary credit of $ 7200 rent - $ 300 x 24 months. This means that it must & 39; to the closure of 130800 $ ($ 142000, less credit points). Closing costs are of the order of & 39; $ 3200 $ make 2000.
You close, and you have $ 2000 more to pay extra, plus $ 7200 for rent beyond what & 39; you pay. & 39; C is $ 12,400. After $ 2000, or in the costs of closure, you have a profit of more than $ 10000.
I recently, from the point of view of an investor & 39; Florida, which had made a deal like this with a condo . In more than 18 months, he made a profit of more than $ 15000. D & 39; In other words, it can be done. Where there is less frequently, it may be difficult to convince the owner of the establishment & 39;, as well as monitoring the renter.
Naturally only the owner can do what you have to do with his heritage, & c 39; is to say why he & 39; d agree with the latter to deal with? Given that you are, & 39; one hand, bother to do so. You are one with the tenant. The seller does solve the problem swiftly - and you are one with the solution - a sandwich lease.
Copyright Steve Gillman. This article is an excerpt from 69 Ways To Make Money In Real Estate. Do you want to know what the other 68? Visit http://www.99reports.com/make-money-in-real-estate.html
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