Real estate options are a really strong tool in your arsenal
to fight personal poverty. Even if you've declared bankrupcy you
can take control of a property and turn it into cash flow and
a single cash payment. I am talking about sandwich lease options
and they are not as rare as you might think. The key is to find
buyers who are motivated. There are always going to be people
going into foreclosure, divorce and disability. People in these
situations usually need a quick sale but there is not much equity
in the house. They don't want to go into foreclosure but if you
see my foreclosure page, there
isn't enough equity room for anyone to make a deal. You can do
a sandwich lease option. A sandwich lease option is where you
rent the house from the owner with the option to buy and then
you rent it out to a tenant with another option to buy. You, of
course, make money on every step. Here's how it looks:
| |
Owner Gets |
You Get |
Tenant Pays |
| House Sale Price |
185,000 |
15,000 |
200,000 |
| Rent X12 |
1400 |
350 |
1750 |
| Down-Payment |
0 |
7000 |
7000 |
| Down-Payment Return to Tenant |
|
-7000 |
-7000 |
| Totals: |
|
19,200 |
|
So everyone wins, the tenant gets to live in a house that he
"owns" before the banks would allow him to own. The
owner gets to get out of his house immediately with no hit to
his credit rating and you get to make 19K. Nice.
Another option strategy is the "subject to" deal. A
subject to deal is basically a set up where you take over the
person's mortgage thereby taking it out of risk. You do not sign
the mortgage papers but you take over the payments. You basically
say to them "You are going to be foreclosed upon unless I
help you, I will pay your mortgage for the next 2 years but you
will need to sign the deed over to me". The bank has the
option to call the loan due if the deed changes hands but if the
mortgage is being paid they generally do not. Once you own the
property it is yours to do anything you want with... sell it,
rent it, option it out or live in it, it's up to you.
Real-Estate-Haven