HELP A BROTHA OUT HERE!

[#1investor]

IS IT BEST TO PURCHASE THE INVESTMENT PROPERTY AND THEN FIND THE L/O TENANT OR SHOULD I GENERATE A LIST OF PERSONS LOOKING TO BETTER THEIR CREDIT, TALK TO THEM, FIND OUT WHAT THEY ARE LOOKING FOR, THEN SEARCH FOR THE PROPERTIES FROM THERE.

[propertymanager]

If you could actually find a lease option buyer before you bought the property, that would be great.  However, in the real world that is a difficult task.  Lease-option "buyers" are really just renters and only a small percentage will ever buy the property.

Mike

[lvrei]

Does it really matter if the tenants buy or not? I mean if they decide not to their option money is non-refundable, your profit. Then you can either renew your L/O aggreement with them or find new tenant/buyers.

Correct?

[propertymanager]

Correct...BUT in real life it doesn't work out quite that well.  The truth is that lease-option "buyers" are really just renters.  Their credit is shot or they would just go to the bank and get a loan to buy a property with better terms and at a better price than the lease-option "seller" is offering.  VERY FEW people with terrible credit have a big pile of cash.  Therefore, while you're waiting to find this rare person with terrible credit but a pile of cash to do your lease-option deal, you are losing rent and continuing to pay carrying costs.  It doesn't take too much waiting for you to actually lose money as compared to just renting the property.  

Most lease option contracts require the tenant to do the maintenance.  However, since they didn't have any more money than the typical renter, they don't do it.  Worse, they may do it wrong.  Then, when you get the house back, there is a LOT of deferred maintenance to be done.  I could go on and on about the realities of lease-options, but you get the idea.  They sound GREAT at a guru seminar, but reality is something quite different.

Mike

[lvrei]

Sorry derlamtay, I don't mean to hijack your thread.

 Propertymanager,

 So do you think sandwhich L\O's is a good way for a person with good credit but no money to start out investing?

 Im in the process of starting out by doing L/O's but you kind of lowered my motivation! Lol!

[propertymanager]

NO!  I think that sandwich lease options are VERY RISKY!  Personally, I do not do them.  

Mike

[lvrei]

So i guess Finding and Referring and also Controlling and Assigning would be the best way to start out and then when i have built up enough cash reserves moving on to Buying and Selling and also Buying, Rehabbing and Selling.

[propertymanager]

Lvrei,

Finding and Referring (Birddogging) does not usually pay very much.   Buying and assigning or otherwise wholesaling is better, but you will have to keep generating deals to get paid and you will be paying income taxes on any profit.  

Your original plan could be made better if you purchased on a lease option and then simply rented out the property.  This is MUCH less risky than a sandwich lease option.  As I said, I never do sandwich lease options.

Good Luck,

Mike

[BBT22]

Hey Mike,

Do you have any suggestions on the best techniques in generating the deals as beginners to wholesaling?

[propertymanager]

One of the easiest techniques is to put the property under contract and then assign the contract to your buyer.  However, you should ALWAYS have the money to close if your buyer falls through (and they frequently do).  To do otherwise is unethical and bad business.

I think that you'll find that it is easy to find a bunch of people who claim to be "buyers", but a lot of them are newbies, wannabes, and pretenders.  You often won't know who the serious buyers are until the money is due.

Mike

[lexfire81]

So is there any hope for those of us out here with low cash reserves and questionable credit?

[propertymanager]

Yes, there is hope.  There is hope IF you start working 2 or 3 jobs; fix your credit; and obtain a little cash.  This shouldn't take too long if you're serious about it.  Then, you can start investing with some money and good credit and you will have a real chance to succeed (IF YOU HAVE DONE YOUR HOMEWORK AND UNDERSTAND THE REALITIES OF RUNNING A BUSINESS).  If you aren't willing to work hard enough to accomplish this, then you won't succeed in starting a business anyway.

Good Luck,

Mike

[oscarpope78]

I disagree Property Manager

[lexfire81]

I was hoping someone would disagree

[dtrump]

I disagree Property Manager

can u tell us why u disagree because iam one with no money. and have a hard time getting the funds to do marketing as iam living pay check to pay check