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What If The Buyer Doesn’t Exercise Their Lease Option When Using The For Rent Method
Joe: Hey, it’s Joe Crump. I’m answering some questions from my students here. The first one here is, “Hi, Joe. What do you do if you use the for rent method to sell a lease option and your buyer doesn’t exercise the option? Do you have to pay, do you have to buy the property and honor your option? Or, do you not buy with lease options unless you’re planning on keeping the property?”
Joe: Well, actually, the beauty of what we’re doing is, we don’t tie ourselves into anything as far as buying properties. Also, it’s an option, so nobody’s required to fulfill that option. You’ll find that, at least I find, on most lease option buyers won’t buy the property, I’d say less than thirty percent will actually end up exercising their option. But, while they’re there, it’s their property and they get to take care of it and they’ll take care of it like it’s their own, and they get a three-year lease on the property, the seller does, and so does the buyer. So, there’s some real advantages to doing it that way. So, it’s not, there’s no fear that you have to keep the property or buy it or be responsible for it. It’s really important to make a distinction between the for rent method and doing sandwich leases.
Joe: Sandwich leases put you in control of the property with a lease option and then you sell with a lease option, you know, you have an assignable lease option so you sell with a lease option and then the buyer pays you and then you pay the seller. I don’t like that situation very much. It does mean that you could get equity later and do that, but the lease options don’t give you much control and if you understand the hierarchy of zero down structures that I teach, and you can learn that on the blog – there’s a bunch of information on that on my blog – but if you understand the zero-down hierarchy, structure hierarchy, you’re going to understand that you want to be in your control.
Joe: If you’re buying a property, you want to be in control of that property. So; you probably buy it subject to or multi-mortgage or land contract. If you’re selling the property you want the buyer to be in less control and so you sell it on a lease option, or maybe a land contract, but you never sell it on a subject to. The subject to is what puts you in control. So if you learn those structures, it’ll put you into a better place of understanding how this stuff works and again, all the stuff is free on the blog.
Joe: I’ve got a book on structuring zero-down deals on Amazon for $3.00. You can check that out. Or, of course, if you get into my mentor program or you get the Automarketer, both of those programs have really excellent training programs in them, you know, full featured, step-by-step programs in them that’ll help you go through this process and learn it a little bit better. But, don’t worry about buying it if you’re buying it the way that I’m teaching. Because I’ve set it up so that you can always walk away from a property if you need to. There’s certain restrictions and certain ways that you have to do it in order to be honorable and ethical and not to get yourself in trouble, but if you do those things you won’t have a problem doing it the way that I teach.
All right. Hope that helps.