In our ultra fast paced online world, as far back as February of 2010, the U.S. had 234 million online mobile devices. In 2011, sales of mobile devices are expected to out pace desktop computer sales. Do you think this is important information to real estate investors?
As a real estate investor, I’d say it’s particularly important to us. Regardless if your specialty is residential or commercial real estate, if you flip deals, rehab houses, or specialize in lease options, this is an industry always on the move. Take a moment to count how many business associates you have that are not constantly accessing emails, sales numbers, websites, statistics, and every other piece of data via their smart phone, laptop, or tablets. Do you have any associates at all that are not constantly in touch with needed information via their mobile device?
Also, your customers are online with a smart phone or other mobile device. Renters and buyers drive by your sign posted at a property expecting to see a website address with more information about what you are offering. If your competitors are providing the information at the customer’s fingertips and you’re not, it puts you at a big disadvantage in today’s online marketplace.
When it comes to mobile internet devices, there is more to it than just having a website for them to view. Staying current with today’s wireless world means having your site designed to be mobile device friendly. I’m a real estate coach, not a web design expert. I’m not an authoritative expert on mobile web design but as a leader in the real estate field, I have the responsibility to keep you informed of important industry developments. This is one of them. Here’s what it means to you:
There are many creative uses for lease options for both residential and commercial properties but few people realize lease options can be a great cost-lowering tool for rehabbing properties. A little creativity gets you in and out of the property for substantially less cost than if you purchased the property outright.
When you purchase, you need to either pay all cash or make a substantial down payment and pay a bunch of closing costs and junk fees to take out a mortgage. People trying to unload a property in poor condition are willing to give you a an assignable lease option. Being able to assign the option to another buyer means no closing costs for you.
When you use a lease option your only cost to get into the property is a modest purchase option fee. Now you have control. Just be sure you include a clause in the option contract allowing you to make improvements to the property. It’ll be easy to convince the owner of a junk property to make improvements costing him nothing.
Your next savings comes from a reduced rent based on the poor condition of the property. How much can be knocked off the rent varies based on the property condition and the local rental market. In today’s market, a 40% reduction can be expected. That means if the going market rate is $700 and you add a lease option premium of $150 per month, the going lease option rental rate will be $850. But based on poor property condition you discount the $700 market rate by 40% down to $420. Add the lease option premium back in to come up with a $570 monthly rent with the $150 being credited towards your purchase price.
Lease options and ‘subject to’ are two important tools enabling you to profit with little or no cash, credit, or risk.
Creativity is at the heart of professional real estate investing. Getting into a good property with little or no money down means you avoid risk while still financially benefitting by controlling the property. Today, and in the near future you will never have better opportunities to use these creative tools. You can gain control over one or one hundred properties in the next year without ever applying for a mortgage.
These techniques won’t work for all transactions but they do for a truly motivated seller. This can be done for either commercial or residential real estate. Here we will focus on residential. And since I’ve blogged about lease options a few times, this one focuses mostly on ‘subject to’.
‘Subject to’ is about gaining ownership of a property without taking out a new loan. Instead, you purchase the property ‘subject to existing financing’. You take over the payments on the house in exchange for the owner signing over the deed to you. You now own the property out right.