Lease Options - a Case Example

Here is an example of a lease option investing deal put together by two of my students, Rance and Ryan:

Within one week of your lease option seminar, we located a vacant rental in a nice neighborhood and were able to negotiate a lease option with the seller. We put the home under contract to purchase it for her full asking price of $175,000 (this was before the market turned down, now they probably wouldn't pay full price). We were to pay $1,000 down, payable in 90 days or when we found a tenant. We paid no interest, with 100 percent of our $900 monthly payment going towards principal reduction. We had three years to cash her out.

We sold it on a one-year lease option in about 10 days for $200,000. That was a great deal for our buyers. We're confident we could have sold it for $220,000. We took $10,000 down, leaving us $9,000 after paying the $1,000 to our seller. We received $1,295 a month from our tenants with no rent credit and none going toward reducing their principal. We got $395 per month positive cash flow for one years that added up to $4,740 plus $25,800 after one year when our tenants exercised their option.

After making $30,540 on our first lease option deal using the strategies you taught us at a half-day seminar, we signed up for your next Lease Option Boot Camp and ended up acquiring 19 more properties the following year; two of them were clients referred to us by our first buyers, who have now acquired two more properties from us. Our buyers still send Christmas cards and coolies and continue to thank us for helping them to buy a home when no one would loan them money because of a previous bankruptcy.

Thank you for sharing your lease option strategy and inspiring us to jump out of our comfort zones.

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