One of America’s billionaires was recently asked the questions: “How do you do it? What is your number one secret to building wealth?” Without even one second Hesitantly, he replied, “Find out what people need most, and give it to them.”

Remember that statement. — give it to them.

there is literally hundreds of different ways of acquiring real estate. In future articles, I’ll share some of the many innovative techniques used in creative real estate financing. In this article, we are going to explore a very useful and profitable real estate financing creative technique commonly called Lease Purchase Options. For ease of explanation, we will refer to Lease Purchase Options as Lease Purchase.

What exactly is a lease purchase?

A lease purchase is a process in which a rental agreement is combined with a purchase or option agreement. Price, contract length, escrow instructions, rental credit, and other relevant terms are negotiated in advance. This allows the tenant/buyer to have a defined percentage or dollar amount to credit a down payment or discount off the full purchase price of the property when a payment is made.

First of all, you need to know what needs, wants and wants the “right” property will satisfy. It is obvious that those needs, desires and desires will be someone’s requirements. That someone is the investor. It is the investor who establishes the value of any property on the market according to his requirements.

A real estate investor always has only two considerations. Those two things are:

1. A return on investment or Profit. (also known as return on investment)

2. A return on investment or Security.

Remember that no matter what the circumstances surrounding an investment, these two considerations are always the same: some form of revenue (i.e. dollars, exchange of property or other goods and services, tax savings, personal use) and securityor a guarantee that the original investment will remain intact and can be recovered.

The lease purchase, (also known as a lease option), has all an investor needs to make a profitable investment in real estate. Using small 1-2% down payments, an investor can control properties that would normally require a 10-30% down payment, without having to see a lender or go through the loan application process.

There are three different ways a good business can make a profit.

1. Cash Up Front with Option Consideration

2. Monthly cash in the form of rent

3. Cash at closing or a note

Other options involve “delivering” the optioned property to a third party or simply acting as a consultant to the buyer and seller, retaining a portion of the option agreement. Controlling properties by creating a lease-purchase option is by far the best way to get involved in home control and get great cash flow, high profits and minimal risk. Lease-purchase can be the best way to create quick cash flow for the first-time homeowner or even the seasoned investor.

The key ingredients in putting together a profitable lease option are:

1. Find a motivated seller

2. Determine what your needs and wants are and create a win/win situation.

3. Find a tenant/buyer

Question: Where do I find a motivated seller? Good question.

Remember that the number one goal of a motivated seller is to get rid of your property. as soon as possible. A salesperson’s motivation can come from many different situations:

o Relocation – job transfers

o Financial difficulties

or Death/Divorce

o Tenant issues

o Change in family size

or build a new house

You need to determine what the salespeople’s motivation is once you contact them. Often a seller is facing financial difficulties and other times it’s just that he doesn’t want to be bothered with the property anymore because he now has other interests. Our first So the priority in talking to the individual initially is to determine Wants versus Needs. Most motivated salespeople fall into the need category. Your situation may not be negative. In the list above there are some items that are very positive for the seller. But it still remains, that this property is no longer needed for whatever reason(s).

You can find these offers:

o Looking for classified ads: “Homes for rent or lease” or “For sale by owner” ads. You can ask them if they would be interested in giving an option to buy your property if they rent it to them.

o Distribute flyers and/or advertisements that say, “I can buy or lease your home” or “I can buy or lease your home in 24 hours! Any size, any condition, any location. Call (your name) (000) 123-4567

o Post an ad in your local newspaper stating that you are looking to rent a home. You can ask if they would consider an option after the owner contacts you).

Question: Where do I find buyers of tenants?

Your tenant/buyer is someone who desperately You want your own home, but for one reason or another, getting bank financing is not going to work for you right now. They either have credit problems, don’t have the large down payment needed to qualify, or don’t have a high enough income. – You have the ability to give this person the opportunity to realize their dreams..

o Post an ad like this: “Rent to Own. If you can rent, you can own! Stop paying your landlord’s mortgage! You can rent to own your own home even with bad credit! Call (your name) (000) 123-4567

o Email occupants of neighboring apartment complexes asking if they are tired of renting and would like to own their own homes.

Some benefits of a lease option for the Investor are:

1. You now control someone else’s property. You are in a position to make money on property you don’t even own.

2. Provides a positive cash flow opportunity.

3. There are no closing costs.

4. A Lease/Option agreement is a one-sided contract – the seller must comply. You are not obligated in any way. If the value of the property depreciates or some other catastrophic event occurs, you can simply walk away.

5. You have no tax or insurance expenses.

6. You are buying the property tomorrow at today’s prices.

7. Little or no money is needed up front.

8. Very little management is needed. Renters/buyers take great pride in the property and therefore tend to maintain and even improve it. That’s because they have an interest in possess – not just rent it.