Our podcast, Strategic Real Estate Investor Radio, has been making waves on iTunes lately! We were ranked at #8 under the “Investing” category – which is HUGE considering there are thousands of other investing podcasts!
We are also featured right on the front page iTunes under the New & Noteworthy section! I want to give a giant shout out to my team for making sure I’m delivering the best cutting edge content possible and getting it out there for you to enjoy.
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Lease Options & Alternate Exit Strategies
I was going through some of my most popular podcasts and came across one from earlier this year about lease options and alternate exit strategies. I’m talking about strategies other than wholesaling and selling to retail buyers.
These are ultimately the way to long-term wealth – when you own high quality, high equity, passive, cash-flowing assets such as businesses and real estate. There are two factors that are most important in achieving wealth:
- The number of years an individual has consistently been saving and investing
- The proportion of their funds on average allocated to higher return investments
As some of you may already know, I was working a full-time job as a financial advisor from 1997 to 2005 so I used to sell products like mutual funds, IRA’s and annuities and I’ve worked with many wealthy clients. In my world, the highest possible return investments are NOT stocks – it’s about investing in assets like passive income real estate that has both equity and cash flow.
When you look at selling these assets, there are four things that allow you to sell houses and buildings very quickly:
- Price – market supportive & attractive to buyers
- Cleanliness & Staging
- Creative Financing
If you can offer the property with creative financing and there is no bank loans needed, you will ultimately have more buyers and action on your property.
What I like to do is sell my properties on a lease with an option to buy. We structure a rental agreement and also structure a purchase and sales agreement with a pre-agreed upon price that is good for the next 12-24 months. The buyer will put down a non-refundable option deposit.
This strategy is great because when you hold properties for more than a year, you qualify for capital gains taxes and you are able to sell the property for full price!
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80 Percent Rule
As you might know, we are busy flipping anywhere from 12-15 properties at any given time. We like to stay busy and since our business is automated and we’re using our investors’ money to fund the rehabs, it’s easy to get them flipped and sold in a timely manner.
Every day, we are bidding on HUD (Housing & Urban Development) homes in 6 counties throughout Northeast Ohio and whenever we get a counter offer that’s below 80% of the current asking price, we then know it’s a potential deal and go check the property out.
I want to walk you through a case study of mine, 242 Sandstone Ridge Way. This property was listed for $170,000 and is located in a neighborhood with comps that are between $200-220,000. The counter offer we received from HUD after our first bid was $125,000, which is about 75% of their asking price so we immediately went to see it and made a counter offer of $131,000 which was accepted.
Our rehab budget was approximately $15,000 because the house is in pretty great condition. We had to do some work to the garage and we decided to add a deck so all together we will be into this house for around $140-141,000. The repairs will take about 4 weeks and then we plan to put it back on the market for $219,000.
Watch the video below for a complete walk-through of our plan for this HUD property:
As always, thanks for your support and please leave us a comment below with any questions, comments or feedback!
CEO Strategic Real Estate Coach
CEO Freeland Ventures and Freeland Lending
CEO Yellow Jacket Properties
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