Quick cash is one of the best early ways to start capitalizing on the fortune that is out there to be made investing in real estate. Sure, you can wholesale, rehab, and work foreclosure deals until the cows come home but, at some point you’ll want to start focusing more on generating monthly income so your next deal doesn’t have to represent your next payday.
True wealth in real estate is created when you hold properties long-term. That may or may not be in the cards for you right now but there is a way to cut your teeth on this concept with a type of deal that pays you quickly, pays you monthly, and that can pay you down the road too. This seemingly miracle deal is better known as a lease option.
Lease options are a form of owner financing, whereby the seller becomes the bank. You can lease option properties from motivated sellers, which is a nice low risk way to get into real estate deals when you are getting started in the business. Using lease option as an exit strategy is far more lucrative and you’ll soon see why.
Buyers are often able to cover a monthly payment requirement but may lack either the down payment or credit score to purchase the property. It is this type of client (of which I am certain there are many right now) who is the perfect candidate for a lease option. They want to own property but simply lack all of the pieces to do so in a traditional way.
Here’s how you can structure a deal for a buyer to both meet their needs and make significant money in doing so. Banks might require a 10% down payment in the current market. You can request 2-5%, making your lease option a better deal than what the buyer could get elsewhere. This money is collected before a buyer ever moves in, making this a source of quick cash for you.
Your lease option does not have to involve formal qualification, meaning that you are in the position of leverage and hold all the cards. Buyers will see value in your program and will thus pay both premium rents and also agree to pay retail value for the property. When you are wisely choosing the real estate deal with which you work, this can mean both a nice monthly income margin (cash flow) and also a nice back end profit when the deal finally sells, usually 2-3 years down the road. Pretty darn cool, if you ask me.
Can you see how a creative approach to how you structure your real estate deals can help you build a fortune? One size does not fit all when working with your investment properties so think out of the box, diversify, and you’ll find that you’ll be well on your way to building the wealth that you’ve always dreamed of.
