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“Lease Option Strategies, Pt. 3 – Selling w/Lease Options”
-October 13th, 2015 @ 7 pm, Pensacola Bay Center –
Lease option investing is one of the most powerful, yet often under-utilized, no-money-down strategies available to creative real estate investors today. Lease options have been used for DECADES by savvy investors to control properties (and PROFIT from them) without ever taking ownership. This helps reduce your overall risk exposure and increases overall rates of return…which we all love!
At this month’s PIG meeting, we’ll be continuing our series on lease option investing, and diving into some of the numerous strategies you can use when SELLING on lease option that will help ensure your deal is a huge success! These techniques can be used on sandwich lease options, or on homes you already own. At this workshop, you’ll learn:
—>> How I Turned a $65 Thrifty Nickel Ad into $33,000 in Just 3 Days with Lease Options!
—>> The Important Elements of a Lease Option Contract to Sell…Including the CROSS DEFAULT Clause
—>> One Important Question to Get Bigger Down Payments on EVERY Deal
—>> How to Use Lease Options to Increase Profits & Reduce Taxes on Each & Every REHAB Deal!
—>> When to Sell on Lease Option, When to Owner Finance, and When to RUN!
This is another meeting that will be WELL WORTH your time to attend, so take a quick second and MARK THIS DATE ON YOUR SMART PHONE CALENDER! The next PIG meeting is right around the corner, October 13th in Pensacola. Don’t miss it!
This meeting is free for all 1st time visitors and members, so INVITE A FRIEND, and come join us!
Hey bud, welcome to the BP community. For the most part, it's a very helpful place to learn and grow. I'm in your area as well (Daphne), and I invest from the Eastern Shore to Destin, FL. If you can pay the rental off in 30 months, that's awesome! I'm a big Dave Ramsey fan, so I believe no debt (or very short term, low LTV debt on flips) is the way to go, and it seems like you're on a great path! Awesome job!
Lease option investing is one of the most powerful, yet often under-utilized, no-money-down strategies available to creative real estate investors. Lease options have been used for DECADES by savvy investors to control properties (and PROFIT from them) without ever taking ownership, thus reducing risk exposure and increasing overall rates of return.
At this month’s PIG meeting, you’ll learn how one of the republican presidential candidates launched his BILLION DOLLAR real estate empire (can you guess which one?) with an option he negotiated in New York. You’ll also learn:
—>> How I Turned a $65 Thrifty Nickel Ad into $33,000 in Just 3 Days with Lease Options!
—>> How to Use Lease Options to Buy Houses with NO MONEY DOWN, No Credit Checks, and No Income Verification!
—>> How to Build a RENTAL Portfolio, and Earn HUGE Monthly Passive Cash Flow, All with Houses You DON’T OWN!
—>> How to Use Lease Options to Increase Profits & Reduce Taxes on Each & Every REHAB Deal!
—>> When to Sell on Lease Option, When to Owner Finance, and When to RUN!
This is one of those meetings you will KICK YOURSELF for missing, so don’t make sure you stop what you are doing right now, and MARK THIS DATE ON YOUR SMART PHONE CALENDER! The next PIG meeting is right around the corner, August 20th in Destin/FWB. Don’t miss it!
This meeting is free for all 1st time visitors and members, so INVITE A FRIEND, and come join us! Directions & Maps Available at the Links Below:
J. Scott, I have also flipped over 150 homes and am doing just fine financially, so while I appreciate your altruistic effort to save me from my "attitude"...trust me, I'm OK. You are over-analyzing and parsing words from a 2-sentence side note I made in like an 8 or 9 paragraph post...something I was just throwing in as food for thought, not trying to re-write the rules of national and international commerce.
This was intended to only be posted to my Bigger Pockets blog, but apparently my assistant posted it to the general postings or something. I'm not very active on Bigger Pockets, and really don't know all the rules. However, since it was posted in a public way, perhaps you felt obligated in some way to correct any inaccuracies so as to protect the unsuspecting public who may be unduly influenced by my poorly worded post. And I thank you for your heroics.
You are correct, my use of "free market" instead of "free trade" was incorrect. I don't have hours in the day to sit here on BP, because I'm running my business. So, I'm sorry again if my 3 minute response wasn't properly researched and well-thought out. If I could somehow delete this post so as to save you from wasting any further time in your day with my senseless drivel, I would. But unfortunately, BP doesn't give me the functionality to do so.
My sincerest apologies for any inconvenience I may have caused you or the rest of the Bigger Pockets world. I will remove the 2-sentence side note from my personal blog in the hopes of not destroying any other lives. I congratulate you on all of your success in real estate, and wish you much more in the future.
I'm very familiar with Fannie Mae's 90 day rule, since I'm sitting on one right now (day 35) that I could have sold same day if not for the rule. So, I will concede that the analogy was a poor one (I will delete) but you're kind of missing the overall point, and I disagree that this has no deleterious impact on the seller. As a free market guy, as most entrepreneurs are, I think it's ridiculous that free trade is restricted in any way, whether it's with real estate short sale purchases, reselling with FHA financing, or health insurance being unable to cross state lines. I'm ticked off that FHA was more than happy to have investors help bail them and the rest of the country out of its mess, but so quicker to slap the anti-flipping rule back on when it suited them.
Let me fix my analogy...let's say the person who provided 50% of all car loans wouldn't allow a car buyer to buy any car in which the dealer had owned it for less than 90 days, or whose name was Joe, or whose eyes were blue, or whatever arbitrary rule they wanted to implement which has nothing to do with the value of the car if adequately appraised. That is NOT just a detriment to buyers, but the seller as well. Your assertion that you can just stroll on over and find a cash buyer (or someone using different financing) might be true, but at what cost? You and I both know that eliminating 50% (or 40% or 30% or whatever) of buyers will cause downward pressure on prices, thus taking money out of the pockets of sellers. Simple supply and demand.
For a number of years now, FHA has enforced a 90 day anti-flipping rule which prevents an investor from reselling a home to a buyer using FHA financing until that have owned the property for at least 90 days. While some investors might think this is a moot point, since most renovation properties take at least 90 days to rehab and sell, that is certainly not always the case. There have been numerous occasions in which I have purchased and resold in less than 90 days, because the property was a very LIGHT rehab, or need nearly no renovation whatsoever.
While most deals do involve BOTH a distressed property AND a distressed seller, that is not always the case, and some times the property will need very little to no work. Just last year, I purchased a home in Pensacola for $50,000 and resold it THE NEXT DAY for $79,900 after spending just $400 to trim the bushes, mulch the beds, and stage the home. Thankfully I had a cash buyer, but had it been someone using FHA financing, I would have had a LONG wait before I could close and realize my profits.
This "anti-flipping" rule wasn't as big of an obstacle for investors in the past, as FHA financing was a very small part of the overall mortgage market. However, when the market crashed and banks were reeling, government insured loans through FHA began to take on a much larger share of the market and so it became a bigger issue for those who were looking to flipping to buyers in less than 90 days.
Thankfully, someone at FHA had a massive "A-HA!" moment back in 2010, and they issued a waiver of the anti-flipping rule. They understood that investors were a huge BENEFIT to the overall real estate market, and that their role of buying distressed home, fixing, and re-selling to strong buyers was a stabilizing force in the market the would help expedite the recovery. Unfortunately, many of the lenders who were issuing these loans were skittish and uncomfortable with the new rule after numerous threats of "buy-backs", penalties, and fines from the government regulatory agencies, and so they added what are known as "overlays" to the FHA guidelines. So, they effectively ignored the anti-flipping waiver, and continued to require sellers to be on title for 90 days, sometimes not even allowing a CONTRACT to be written until the 91st day.
Sadly, this social awareness of the necessity of investors in the marketplace, and their benefit as a force to help recycle old dilapidated real estate into good, quality, affordable housing has disappeared from the minds of the powers that be at FHA. As a result, the decided not to extend the anti-flipping waiver last year, and investors became evil once again on January 1st of 2015, and now have to be punished with an extra long wait to re-sell if they happen to buy a good deal.
(SIDE NOTE: Can you imagine this ever happening in ANY other industry? A car dealer gets a good deal on a trade-in, and is FORCED to hold it for a period of time before he can sell? Dollar General buys some close out light bulbs for pennies on the dollar, but has to wait 6 months before they can sell them in stores? Hogwash!)
So, what's the lesson to be learned for active real estate investors?
Number 1 - Multiple offer situations - If you receive multiple offers on a house, you may want to take extra care to review all of the TERMS of the deal, including the type of FINANCING. Though one offer might be higher in purchase price, if it's an FHA offer that requires you to wait an extra 30-60 days before you can sell, you may end up netting less money due to increased holding costs such as debt service, utilities, insurance, property taxes, etc.
Number 2 - Review Sales Data BEFORE Purchasing or Marketing - As I mentioned in our recent meeting entitled "The Gatekeepers", Realtors have access to data on the MLS that can you provide you with which types of financing are more popular in a certain area, whether cash, conventional, FHA, or VA. If an area is heavy with FHA buyers, you may decide to market to a different area, or at least be aware of it going in to the project so you can estimate your holding costs accordingly.
What's your experience with FHA buyers and/or the 90 day anti-flipping rule? Let me know your thoughts below!
It's been about 7 years since I had much intimate involvement with the ESA inspections (you can probably guess what happened 7 years ago to slow that down...haha.) I'm sure prices have changed quite a bit, but I know a Phase 1 was fairly inexpensive because it's just a basic review to see if they need to dig further...anywhere from $1,000 to $3,000. However, if it's a very complex deal or large piece of property, it could run in the tens of thousands. Phase 2 and Phase 3 go up from there depending on what they find and the necessary level or discovery and remediation. And yes, you are correct, almost all vacant land contracts have a very open feasibility study period that allows you to walk for any reason. So, if you found something in a Phase 1, you could certainly go back and renegotiate price, using your findings as leverage in that process.
Lease option investing is one of the most powerful, yet often under-utilized, no-money-down strategies available to creative real estate investors. Lease options have been used for DECADES by savvy investors to control properties (and PROFIT from them) without ever taking ownership, thus reducing risk exposure and increasing overall rates of return.
At this month’s PIG meeting, you’ll learn how one of the republican presidential candidates launched his BILLION DOLLAR real estate empire (can you guess which one?) with an option he negotiated in New York. You’ll also learn:
—>> How I Turned a $65 Thrifty Nickel Ad into $33,000 in Just 3 Days with Lease Options!
—>> How to Use Lease Options to Buy Houses with NO MONEY DOWN, No Credit Checks, and No Income Verification!
—>> How to Build a RENTAL Portfolio, and Earn HUGE Monthly Passive Cash Flow, All with Houses You DON’T OWN!
—>> How to Use Lease Options to Increase Profits & Reduce Taxes on Each & Every REHAB Deal!
—>> When to Sell on Lease Option, When to Owner Finance, and When to RUN!
This is one of those meetings you will KICK YOURSELF for missing, so don’t make sure you stop what you are doing right now, and MARK THIS DATE ON YOUR SMART PHONE CALENDER! The next PIG meeting is right around the corner, August 11th in Pensacola. Don’t miss it!
This meeting is free for all 1st time visitors and members, so INVITE A FRIEND, and come join us!
And you can contact Geoffrey Maddux at GLM & Associates in Navarre if you need someone to handle you Phase 1 or 2 ESA, or other environmental consulting like petroleum and hazardous waste, etc. 850-939-8037
