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Tips for Investing in Real Estate
Beginning a hobby or career in real
estate investing doesn't have to be so complicated or
such hard work if you will only begin with what you
have, right where you are at this moment.
Look for someone who really needs to
sell their home and solve their problem. One of the
fastest solutions if they are about to lose the house
is to take over their payments on a subject-to contract.
By giving them some walking money, they can afford to
move and still have the cash to rent another home.
Then, clean up the property, lease it
out to a future buyer on a rent-to-own basis which is
called a Lease/Option. You get to collect an up-front,
non-refundable deposit. Three to five percent of the
future purchase price is a good figure to shoot for.
You can actually do this every month and make some additional
cash, or concentrate on this method as a full time lifestyle.
Have the renter/buyer sign a contract.
You pocket the difference between what you're paying
the original owner and the amount you're collecting
from the new renter/buyer. The spread is higher on nice,
expensive homes in great neighborhoods, so don't be
afraid to search in these areas.
This is a good method of collecting
extra cash flow every month. There is no limit to the
number of these deals you can do other than your time
and effort.
Call on every "For Rent" ad
in the local paper and just ask if they would be willing
to sell the property in a couple of years if you sign
a long-term lease. If you get a yes, negotiate a fair
purchase price, sign a contract and find a renter/buyer.
It really is that simple. Of course, you want to have
a lawyer check out the contracts on the first deal to
protect both parties.
Try to get at least $150 more per month
than you are paying. Also get a minimum of $1000 above
and beyond what you have paid out as the option deposit.
You don't want to be working for free, do you?
Let's look at some figures from actual
lease/options. A couple were behind on their notes because
he lost his job, and she didn't make enough to pay all
the living expense. The stress was causing marital problems
and they wanted to sell, but the house stayed on the
market for six months with no takers.
They were getting desperate when a neighbor
mentioned the situation to her church group. One of
the group's members had a son who was looking for a
house that could be leased with an option to purchase
in a few years. He and his wife didn't have a lot of
money for a down payment, but they knew that buying
was better than renting.
After looking at the property, they
decided it would be a perfect first home if they could
manage the financing. The couple offered $1000 as a
non-refundable option deposit, if the current owners
would give them two years to qualify for a new mortgage.
The timing was right and the current owners accepted
the offer. The monthly payment they agreed on was $200
less than similar house rentals in the area.
Both couples were happy and they signed
contracts for the deal the next day. The new couple
didn't even move in. They saw an opportunity to make
some quick cash and a good monthly cash flow, so they
lease/optioned the house to another couple for $5000
down with payments that were $300 above their obligation.
If this new couple closes on the deal
in 1 year, they will have earned $5,000 up front and
$3,600 over the course of the year in monthly cash flow.
By the way, the sales price was $12,000 higher than
what they had agreed to pay the original owners. Added
up this equals $20,600 for just a few hours work.
These deals exist in every town in the
world. You can do these until you build up your bankroll
and monthly cash flow. There are no geographical limits.
Travel the world doing deals, living where you please
and life is no longer on a budget.
1howto.com
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