2 Ways to Wholesale Lease Options

In the last article, we discussed the basics or lease option investing.  In this article, I will share 2 different ways to wholesale lease options.  One of them provides fast cash, while the other provides fast cash upfront, monthly income, and a chunk of money when your buyer exercises their option.

Wholesaling lease options is as simple as understanding what to negotiate with the seller and what to put into the actual agreement. Then understanding how to find the right “end-buyer” for the property. 

So let’s jump right into it.

Depending on the deal that you structure with the seller, there are 2 different ways to wholesale lease options.  Of course there are other ways, but these are the 2 easiest ways to do it from my personal experiences.

Here are the basic outlines of the 2…

Wholesale Lease Options Exit Strategy #1:

The Sublease Strategy-

Here’s an example…

An investor can take over a property (even in distress) with a lease option and make improvements to the property (if necessary). Then the investor can sell the option to a buyer that is willing to pay a higher price for the property.

So let’s just say that you find a seller that has a property that needs some minor work (less than $10k) and the seller is willing to do a lease option on their property.

Let’s assume that after doing some research and running your comps, you find out that the property is valued at $150,000.  So after running your numbers you make a deal with the seller to purchase the property for $95,000.

Let’s say that the seller’s monthly payments are $800 per month and the seller is willing to negotiate a $1000 monthly payment with you. While doing your research you find that the average monthly rent in the area is going for $1400 per month.

So to sum it up, you pick up a property for $1000 per month in an area where the same property is renting for $1400. This leaves you with a potential $400 monthly profit. Also you find out that the house is in an area where houses are selling for $150,000 in great condition and you pick up the property for $95,000 which leaves you with $55,000 in equity.

So here are the steps:

Step 1: Sign a Rental Agreement with the seller

• Be sure to have the right to “SUBLEASE” the property or assign your rights in the lease to another party.
• Make sure the rents in the area are higher than what you have to pay to the seller

Step 2: Sign your Option to Purchase Agreement

• The purchase price can be whatever the appraised value of the property is at the time the option is exercised.
• Be sure to have at least a 3 year or more option term
• Be sure to get some of the lease payment credited toward the purchase

Step 3: Record the Option at the Court House

Step 4: Find a Buyer that is looking for a lease option (rent to own) type of deal.

Step 5: Agree to Sublease the property to your end-buyer

Step 6: Collect a non-refundable down payment from your end buyer

Step 7: Collect the rent money each month from your end buyer

Step 8: When your buyer is ready to exercise the option, sign a purchase and sale agreement, close the deal and collect the remaining amount of your money (after paying the seller off)

Step 9: You will release notice of option at the court house

Step 10: End Buyer takes over property

Wholesale Lease Options Exit Strategy #2:

The Wholesale Strategy-

Here are the basics

Step 1: Sign a Rental Agreement with the seller

Step 2: Sign your Option to Purchase Agreement

Step 3: Record the Option at the Court House

Step 4: Find a Buyer to take over the Lease Option Deal

Step 5: Sign a Purchase and Sale Agreement with the seller

Step 6: Assign your Contract to the End Buyer

Step 6: Buyer Pays Non-Refundable Assignment Fee to You

Step 7: You will release notice of option at the court house

Step 8: End Buyer takes over property

And those are the basics of wholesaling lease option deals.  There is obviously a lot more to it than I can possibly cover in 2 articles. But you get the idea.

Like Always…

It all starts with generating leads.  If you are looking for an easy way to do this watch this video now >>

Be sure to “Share” this post and leave a comment below to let me know what’s on your mind.