Making Deals With Lease Options - How I've Done It | Ep. #29

10/08/19 • 30 min

... and Landlord! Rental Real Estate Investing Podcast

I am a "Transaction Engineer" - Which is my way of saying that I engineer (or create) transactions of Real Estate deals, using whatever means or tools are at my disposal. Lease-Options are one such tool in my belt that I've used to great success. So in this episode of the... and Landlord Podcast, I relate my story of having used Lease-Options to successfully acquire 3 Rental Properties - essentially for FREE!

Now yes, I did have to put some money into each property - at least initially. Each required an "Option Fee", which is a non-refundable pre-payment of some amount of the purchase price to create a binding contract. For these 3 deals, the Option Fees were $100; $1,000; and $3,000 - respectively. Also, each property needed approximately $9,000 of rehab (give or take a few thousand) - to make them rental ready.

But I use zero-interest credit card promotions for most of my rehab expenses - so that's FREE money not coming out of my pocket. And here, the properties themselves kicked off enough positive cash-flow (once rented), to both payoff the credit card balances prior to any interest hitting. They also paid me back for any actual cash out of pocket, such as for the Option Fees or any rehab expenses that I couldn't put on a zero-interest card.

In this episode of the... and Landlord Podcast, I even relate how the properties increased in value during the Option period, so when I actually did complete the purchase a year or two later, I was buying them well below their current value - allowing me to walk away from the purchase closing table with a check in hand. How often do you buy a house and get paid to do so!?

Lease-Options are a two part contract... The first part is the Lease, which is not much different than any Lease for any property, where you agree to pay a monthly rent to occupy the home for some period of time, along with other rules, requirements and restrictions. Some slight differences here are that you are not going to occupy the home yourself, but instead have the right to sub-lease the property to an end Tenant of your choosing, and collect all rents.

The second part of the contract is the Option, which gives you the right to purchase the property at any point prior to the end of the Lease / Option period, for an already agreed price - that does not change regardless of if the value of the property should go up or down during that period. The Option contract gets recorded against the property title / deed, so that it cannot be sold to anyone other than the Option holder during the Option period. You have the property on lock.

And it is typically the case that in exchange for being granted a binding Option to purchase the property and full control, the Option holder is also fully responsible for paying all expenses related to the property, which would most often include the mortgage; taxes; insurance; repairs / maintenance; rehab / upgrades, etc... Because after all, you are making money on the property - its essentially yours, as you have full control and all rights. And depending on the market and property conditions, you may also be paying a premium of some amount to the owner for this privilege.

So I'm a real fan of Lease-Options, because if you can find a home and potential seller with the right motivation(s), and you can craft a presentation that explains the value and benefits to the owner, while overcoming any obstacles and objections (there may be several) - you can truly create a win / win / win situation.

Of course the first two wins are you and the seller; but that third win is for the Tenant who now gets to live in a great home that would not have otherwise been available - if not for your being a "Transaction Engineer" who understand and can leverage the power of the Lease-Option.

Previous Episode

The Investor's Realtor - Announcing Blue Chariot Realty & Working With Realtors | Ep. #28 - Special

So this is another special announcement episode - this time announcing Blue Chariot Realty! You may remember previously (in Episode #12) I announced Professional Property Management Services from Blue Chariot Management. Well, now I'm announcing my North Carolina Licensed Realty Firm (Blue Chariot Realty) - of which I (Jonathan Taylor Smith) am the Licensed Broker-In-Charge.

Further, Blue Chariot Realty has joined with eXp Realty - so its "Blue Chariot Realty, Brokered By eXp Realty". More on that later, but I did not want this episode to be completely self-serving, so I've also packed in lots of information about "The Investor's Realtor" and working with Realtors as an Investor to obtain more Rental Properties.

What makes a good Investor's Realtor? Well, of course, like I very humbly mention in this episode - you want a Realtor just like me! But if you're not seeking properties here or your not local to the Raleigh / Durham (Triangle) area of North Carolina - then you can't work with me as your Realtor. Instead, you need to find someone just like me, and so I go into a bit of detail to that end as to what you should be looking for in a Realtor.

You see, a lot of Investors do not want to work with a Realtor who is also an Investor themselves - for fear that such a Realtor will keep all the great deals for themselves. Hey - maybe so, but they can't buy everything! And getting in good with them, making yourself known as a real Investor who is able to close quickly on any decent opportunities - will make you far more likely to be top of mind when such an opportunity comes along that they can't buy for themselves.

So in this episode, I go into some of those details as to why you should WANT to work with an experienced Realtor who is also an Investor. Then I spend the rest of the time talking about myself and Blue Chariot Realty 🙂 - as what kind of a special announcement episode would it be if I didn't!?

Next Episode

Becoming / Being A Landlord With (Hopefully Not In Spite Of) Your Spouse | Ep. #30

Real Estate Investing is a team sport, and its hard to win the game when you're not playing as a team. My teammate is my wife. So how do you get your spouse to even want to join you in this particular game of being a Rental Real Estate Investor... and Landlord?

In this episode of the [... and Landlord!] Rental Real Estate Investing Podcast, I relate how my 20 years of entrepreneurial endeavors have benefited from (and were made possible by) the unwavering support of my wife - starting before we even got married. She's been my rock, and I couldn't have done it without her - so I share some of those details.

But since I'm the one in business... I'm the one buying Rental Properties. I'm the one going to seminars, conventions and trade-shows. I'm the one reading countless books and listening to podcasts each day. So here I cover some of the things I've done to bring my wife along on this journey - fully informed and excited herself about each step along the way.

If you feel that your spouse isn't on your team (yet), when it comes to this particular game of Rental Real Estate Investing - maybe this episode will start you down that path of building confidence and interest in them as to why they've got to get into this game ASAP! Because this game can make the average person rich - and you don't have to know how to do anything with a ball or a deck of cards. All the talent you need for this can be learned. And its so much easier when your spouse is on your team and fully in the game.