I get asked all the time about wholesaling lease options. These are also known as cooperative assignments or arbitrage lease options. Simply put, this is when you get a lease option agreement and then sign that agreement over to somebody else.
Lease options are best for sellers who don’t have enough equity. Maybe they owe too much on the property, or they don’t have the money to fix it up to sell. I used to throw those leads away, but one day I thought, what if I did a lease option on these properties?
I stumbled my way through the process at first, and did too much work for not enough money. Then I discovered a forum on naked-investor.com where people were using lease options to flip houses remotely. One guy was living in India and wholesaling lease options in Chicago, and making good money doing it. That was when I learned the right way to go about this whole process.
Find a motivated seller who is willing to do a lease option. Then, find a tenant buyer, someone in what I like to call the “penalty box:” they are maybe six months to a year away from qualifying for a mortgage. Their credit isn’t perfect, but they have a good reason for the bad credit. Set the deal up so that you get the deposit as your fee, and everyone wins. You get paid, the seller gets rent money while the house is still on the market, and the tenants get to lease a home with the option to buy it at the end of the agreement.
There’s more to it than that, obviously, but I’ll go over it all in detail. And to learn more, get my free book over on WLObook.com.
Listen and learn:
- Everything you need to know about lease option agreements.
- What properties should you do a lease option on?
- How to get a better commission from lease options.
- Present the deal to the seller as a partnership.
- “Penalty box” tenants.
Mentioned in this episode:
What are you thinking?
First off, we really love feedback, so please click here to give us a quick review in iTunes! Got any thoughts on this episode? We’d love to hear ’em too. Talk to us in the comments below.
Enjoy this podcast? Share the love!