Lease Options for wholesalers

[Michael Fagan]

I was reading an article, and it all made sense and was easy to follow except when I got to this:

"Usually in 2 weeks I get a buyer, and we make $5000 a house (sometimes I take a note on maybe 20% to 33% of the down payment.) "...

How are you making $5000 on the house, does taking a note mean borrowing the buyer the down payment?

"This is in and out, not a sandwich lease option." ... 

I'm thinking that means once the transaction is done they are done?

"We act as a principal in a lease option, then assign. We work with land contracts too in the same manner."...

Not sure what acting as the principal means or assigning?

I have a ton of questions about how the mortgage companies are involved, and how the wholesaler would get paid? I sounds like basically the wholesaler would be the middleman to the transaction, but the buyer has to get the mortgage before the seller would be free of his mortgage and I believe in a rent to own situation could take quite a while.

[Brian Gibbons]

@Michael Fagan

Let's say you have a $100K house, owes 95K, $5K equity

1. Selling with an Agent: It costs about 10K to sell, or 10%, because of 6% sales comm, 2% closing costs, and 2-6% in other fees (holding PITI costs to sell, spruce up paint and other costs, seller's concessions, negotiation wiggle room costs, etc), so seller has to pay about $5K (difference) to sell with an agent.

2. Property Manager: You can rent it out.  Pay 10% or so to property manager, with no guarantees of no damage or prompt payment or no evictions.

3. Terms Sale: You can sell on terms. In WI you have land contracts and lease w option. You, as the REI Operator can enter into a letter of intent to purchase on either land contract or on lease w option, with the intention to assign or sell your contract.

Legal WI Land Contracts -

http://www.fryberger.com/articles/wisconsin-land-c...

Now what I do is