Читать книгу Sandwich Lease Options: Your Complete Guide to Understanding Sandwich Lease Options - Wendy Patton - Страница 11

I knew Janet and I were going to come to terms and do the necessary paperwork on Sunday so I ran an ad on that same Sunday and I got a call from Roberta. I told Roberta that she could drive by the home but that she could not go in yet or on the property, because someone still lived there. Roberta didn’t even know I didn’t have the deal tied up – I just wanted her to drive by and see if she liked it.

Roberta had poor credit and seven dogs. Most landlords won’t rent to someone with seven dogs, and most mortgage lenders won’t do a mortgage for someone who has poor credit. With an inability to get a mortgage she is also unable to work conventionally with a Realtor®, so what is she going to do? No one will rent to her, and no one will give her a mortgage. This puts many people in a situation where they desperately need a solution. I am trying to help people with this type of situation. They want the American dream, yet they are unable to obtain it any other way. Lease options give people a second chance to improve their credit while working towards the purchase of the home they desire to own.

If you’re a landlord, all you get up front on any of your rentals is the security deposit, and that is just not enough cash to take on the risk of someone with poor credit and seven dogs. You can change this scenario by converting these people from tenants to tenant-buyers. Then, the risk that once was on you is shifted to the tenant-buyer - where you truly want it. With Roberta putting a lot of money down (option fees are not refundable), she was taking on the risk.

Let’s look at how the deal transpired:

My Out of Pocket costs:

I didn’t even own this home and yet I had $5,000 in my pocket. Roberta is the one risking $10,000 with her option fee, as it is non-refundable. If she doesn’t buy, she’s walking away from a lot of money. She now has a lot of risk on her also with her $10,000 option fee.

Janet asked for $1,100 per month, and I in turn asked Roberta for $1,450 per month. That way I was able to pay Janet and still have a cash flow of $350 per month which would add to my profitability in the deal. In this case Janet had a lot of equity in the home, and I was able to leverage that equity to get her to accept the lower monthly payment of $1,100.

The option sale price I set for Roberta was $225,000. How did I get that figure? I put a 10 percent option premium on top of the retail price (to be discussed in a later chapter – Determining Profitability of Deals) plus I added an additional 6 to 7 percent appreciation rate at 18 months which was approximately another $20,000, I rounded it up a little to get to $225,000.

Now I understand that you may or may not have appreciation in your market at the time you’re reading this book. It doesn’t matter if you do or don’t; you account for that in the beginning before you make your offer to purchase.

What was the property actually worth? Value is always determined on what a buyer is willing to pay. Roberta later had the house appraised at $267,000. Did I lose $42,000? I don’t think so. After all, I did make about that much. Was Roberta happy with the appraisal? OF COURSE! Janet is happy because she got the price she wanted, and Roberta is happy because she’s suddenly has an appraisal that gives her an additional $42,000 in equity that she can utilize if she wants. Janet won, Roberta won, and I won. I believe this demonstrates what a classic win/win/win deal is all about.

Here’s my profit at closing: Not bad for not actually owning anything (except for 2 hours) – just controlling it!

* It is not exactly $43,700. There are transfer fees in a few states, title insurance fees, and I give my buyers option credits each month when they pay their rent on time. The extra $2,800 on tax pro-rations was given as extra profit to me also (not available in most states - a bonus when both the buyer and the seller paid for property taxes at closing. Only one person needed to pay for property taxes. Therefore, the extra $2,800 is given to the investor in the middle of the sandwich lease option deal.