how do i make money on a lease option?

3 Replies

my RE teacher last weekend sent out a voice blast asking if people would rather a lease option or if he could do a rent to own and people wanted to say yes

i dont get how it works though

am i filling their house up with tenants? how does that help me?

There are two main ways to do a lease option and earn.

The first is contracting an option on the house and then assigning the option to an end buyer for a fee (option fee). You keep the fee which is typically 3% of the sale price.

The second way is contracting an option and the finding a buyer that you manage. In this scenario you not only keep the option fee you get the rental amount which should be higher than the rental price you agreed to pay the seller, plus you get the difference between sale prices, so you agreed to pay the seller $100,000 but you got a buyer at $115,000. Here there are 3 different ways to earn. However in this case you agree to pay rent even if you do not have a tenant, so there is more risk involved.

@John Jackson and I would stipulate that that staying in the middle of a Sandwich lease option is not wise for someone not having reserves of 3-4 months in case of damage or evictions.

Assignments of lease options (coops, wholesaling lease options, the same thing) are the easiest for the rookie that is BROKE.

Go get 10 lease option assignments and get out of debt, have $20K in reserveves, then think ablut sandwiches.

@Brian Gibbons is totally right here. I'm experienced, and I wouldn't dare do a sandwich lease option. In my opinion, it makes more sense to own that house via sub2 rather than try to do a risky SLO. Stick with assignents... quick cash, easy in, easy out. And in my opinion voice blasting isn't nearly as effective as text blasting for this niche.

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