One of the most common ways to buy property is through creating an agreement with the seller whereby you lease the property from them, much like you would lease a car, with an option to purchase the property from them at an agreed upon price and by an agreed upon date in the future.

Under this scenario, the homeowner maintains ownership (i.e. the deed) on the property, but you have an equitable interest (control) and the right to sub-lease the property to a prospective buyer and give them the option to buy from you. In fact, by lease-optioning a property.

Here are our six different buying strategies: getting the deed “Subject to”; Land Contract; All Cash; Split Fund; Straight Option and Lease Option.

Please remember that the All Cash and Split-Fund strategies are for ugly, rundown houses only.

When we’re considering the Lease-Option offer to a seller, we’re only going to make such an offer to higher-end homeowners, people whose homes are in good shape; people with vested interests in leasing and/or selling the house to someone who is going to properly maintain it. In short, we are now focusing on the pretty-house side of the business.

Most sellers who lease option their house are looking for debt relief. They may have had a job transfer, or maybe there was a divorce and neither party can keep the house on their own. Or maybe they’re living some-where else, renting, and just couldn’t sell the house in time before they moved. However, there are some sellers who do not want to sell the property and lose complete control over it buy handing over the deed of ownership, losing the benefits of being a landlord—like depreciation for their taxes and receiving monthly payments when selling or renting. But they may consider leasing the property to you with an option to buy.

Now, since we’re on the pretty-house side of the business, a homeowner’s asking price is going to be considerably more than what we would purchase an ugly house for. Even if they may really want to sell that house, we may not be able to buy it at a price that makes sense to us to pay them all cash. However, the benefit of offering the lease-option strategy is that it provides us with an opportunity to offer a higher price to the seller—up to 70-80% of the value of the house (as opposed to only 50-60% through the all-cash buying strategy).

We could also offer 70-80% through the Land Contract buying strategy. If fact, if you had it your way, you’d want to try to see if they’d accept a Land Contract first for the simple reason that you’d be getting the ownership, have control over the property, and you’d have more strategies you could employ to sell the house. But sometimes the seller just doesn’t want to hand over the deed or ownership through a Land Contract if we’re not buying the home outright.

So we’ll immediately flip to our lease option offer and say something like this:

“I can certainly understand that you want to maintain a little more control. I do have a Lease Option program in which you’ll be able to maintain ownership of the property, and you and I will have an agreed upon price which I’ll buy the home from you at some point in the future. I will make monthly lease payments to you in the meantime, up until, if and when, I exercise my option to buy it from you.”

The first thing you do is agree upon a purchase price and the amount of a monthly lease payment. You’ll maintain the home in good condition until you exercise your option to buy the house. Then you agree upon a date in which you will purchase the property from the owner. In addition to that, you have the right to sublease the property to a tenant/buyer of our own. At that time, the home will be paid off in full.

A Matter of Trust
The most important component of buying houses through Lease Options is the rapport that you build with the homeowner. If someone has the intent to sell their house and they contact you, you are offering a different kind of creative strategy for them to sell. When it comes to buying and selling houses, most of the outside world only knows that “I find a buyer, and they come in and pay me off at closing in full.” That’s conventional wisdom.

So if we’re offering something outside the norm, like a lease with the option to purchase, it really comes down to trust. You either build rapport to the point where they trust that you know what you’re doing and they feel confident that you can produce, or you won’t get the deal. If someone is unsure of you, or of your ability to do what you say you’re going to do, they most likely aren’t going to just come out and say, “I don’t trust you.” Instead, they’ll come up with objections. When the human mind is feeling uncertain about something, it’ll create reasons as to why this should not work, why I shouldn’t take action, or why I shouldn’t trust this person.

Objections are perfectly natural. When someone presents you with an objection, what they’re really saying is, “I think I understand, but I’m still missing a piece. I cannot say yes with complete confidence. Please keep talking to me to fill in the information that I’m missing.” After you’ve completely covered their objections in an open and honest manner, they will become comfortable in working with you.

It’s the way that you handle their objections that will determine the rapport and trust you build with them. You want to cover the material in a natural tone of voice. If the person picks up on the fact that you are reading a script, then you will lose all their trust. Building and maintaining trust are the most critical parts of becoming successful in this business.

About Tim Taylor Real Estate Success Coach
Tim Taylor real estate success coach and author of “Wealth with Purpose” is an accomplished learner. He has been mentored by Robert Kiyosaki, Robert Allen and Ron LeGrand and is now passing on the secrets he has come to know and practice onto select individuals with a burning desire to become successful real estate investors.

To receive more valuable real estate investing tips, sign up for Tim Taylor’s free real estate investing newsletters at http://www.TimTaylorSuccessCoach.com.

As you move forward into the business of buying and selling houses, you’ll need to start looking at how successful investors make offers. Let’s say you already have your marketing in place. You’re getting leads, and you know how to pre-screen those leads by asking three questions:

1. Is the house pristine or neglected (pretty or ugly)?

2. Can you buy the house with immediate equity built in the day you buy it, or can you create equity?

3. What is the degree of the seller’s motivation? The way you can answer that is by looking at the WWOW:

W: What is the property WORTH (value)?

W: How much do they WANT (asking price)?

O: How much do they OWE (the loan balance, if any)?

W: WHY are they selling (their motivation)?

Let’s say a lead comes in on a property estimated to be worth $100,000 (after the house is fixed-up) by a certified appraiser, but the seller is asking for $75,000. They owe nothing on the house, and the reason they’re selling it is because it was inherited.

You’ve now got clues to answer all three of the questions above. To the seller, that house is little more than a free pile of money gifted to them from a relative. Not only are they not emotionally attached to it, but they are telling you by their asking price that they are willing to give up $25,000 worth of equity. That immediately answers questions two and three. You know you’ve got them leaning in the right direction. Their motivations are in your favor.

By looking at the average house price in the market of the lead, you can tell whether it’s a pretty house or an ugly house. In this case, let’s say the market average in that area is $200,000. With this house being below market average (because it’s only worth 100k) we would lean toward this probably being an ugly house, most likely needing some degree of repairs.

Now there are really only two buying strategies when it comes to buying ugly houses-either All-Cash or Split-Fund!

The other four buying strategies are for pretty houses only because your exit strategy for getting rid of a property that you get a deed on, for example, is to owner finance or lease option that property when you sell it. You’re taking over someone else’s mortgage and then you’re going to create financing with your buyer that wraps around the mortgage that you took over. You are only going to do that with pretty houses because you’ll be selling to a higher-end buyer-they’re usually more responsible and can pay bigger down payments.

Even if you can get a super deal on a house buying all-cash, you never do it on a pretty house because there are only two ways to lose money in real estate-writing a big check to buy a house or signing your name to a big bank loan in the process of buying. Even if you could get an $800,000 house for $500,000 all-cash, you don’t violate those rules. Not that it’s out of the question that this can turn out to your benefit, but it’s rare-it’ll happen maybe once or twice in your entire career as a real estate investor, if at all. As a rule, it’s a safer bet to take an option on a pretty house rather than risk your cash.

So we’re going to focus on the all-cash strategy in this example.Since we’ve determined that it’s an ugly house, we have to consider that it will need repairs. You don’t have to be absolutely accurate about what that estimate will be. In fact, you can underestimate and still not get hurt badly because when you’re using the all-cash formula, you’ll be guaranteed to turn a profit. Based on what the owner says the house needs-new paint, carpets, minor upgrades as such-we can make a ballpark estimate that repairs will cost about $10,000. So what can you offer based on this scenario?

The maximum offer for an all cash purchase is 65% of the ARV (After-Repair Value) of the house.

That leaves a 35% profit, hedge factor, cushion, whatever you want to call it. For this example, let’s say the ARV, based on legitimate comps, confirms that the house is indeed worth $100,000. Multiply that by .65, then subtract the$10,000 in repairs, and your maximum offer would be $55,000.

The reason why we buy at 65% is because we leave open one of our selling strategies-wholesaling. When you wholesale the house to someone, you’re typically selling it to an investor who is going to buy it in cash from you, then rehab it and sell it again. When you buy at 65%, you can typically sell it fairly quickly to an investor at 70%, turning a 5% wholesale profit.

This formula only changes when you write a check and pay cash for a house when you current real estate market conditions declining in value. In such cases, you may want to lower your buying all-cash formula factor down from .65 to .50. Before you make the offer, make sure you have reliable comps on the house and include a repair estimate, a ballpark number that’s reasonably considered. Also, when making an offer, you don’t want to come out of the gate making your MAO (maximum allowable offer). You might want to start out around $48,000 in this case, or wherever you’d like, but you know that the most you will offer is your MAO of $55,000.

If we’re writing a check for anything, we’re either getting it at a great discount or we’re not doing it. As long as the ARV is correct and you factor in repairs somewhat accurately, you will never get hurt using this formula.

To request a Free 30 minute consultation, or to find out if you qualify for Tim Taylor’s Success Coaching Program, visit http://www.timtaylorsuccesscoach.com/free_consultation.php

In science, as with all things in life, there are laws that govern how things work. For any endeavor, when you apply these laws, there will be identifiable results. It’s no different with attracting success in real estate. There are Five Key Steps to becoming wealthy in real estate investing. These are very specific strategies that, if you follow them, will guarantee a successful return. If you have these five steps in order, you’ll buy and sell 25 houses or more per year, and earn at least $500,000 a year, all while working 15 hours a week or less. The first step to follow is having Effective Marketing in place that attracts motivated house sellers. There are two ways this will happen:

1. They find you.
2. You approach them as a buyer.

Which way would be more efficient? Of course, it’s much easier for them to call you as opposed to your labor in finding them. Additionally, when you are soliciting them, they are in control from a psychological point of view. You are demonstrating a need, and that puts them in a position to leverage that need.

We’ll look at two low-cost, effective marketing mediums to attract motivated sellers to call you:

1. Newspaper Classified Ads (Real Estate Wanted Section—Daily)
2. Bandit Signs (Yard and/or Road Signs)

Classified Ads in the Real Estate Wanted Section
Run an ad daily in the Real Estate Wanted section of your local newspaper(s) 365 days a year. If your local newspaper doesn’t have a Real Estate Wanted section, ask them to create one. If you tell them that you will be running an ad every single day, it’ll be worth their effort. Also, this ad will buy more houses and definitely outweigh any cost that you initially put into it.

In some places, it costs $300 a month, and in other places it cost$1500 a month. Quite honestly, it doesn’t matter what it costs. If you buy and sell just one house, that ad just paid for itself and then some. Here’s what the ad should look like:

Sell Your House Fast! Quick Sale – Fair Price (707) 555-1212.

The first letter of each of these words is capitalized. Make sure you specify House in the first line and not Home. People are attached to homes, not houses, and we want people who want to get rid of their house. Do not capitalize everything because it’s harder for the eyes to see. It is psychologically proven that when you only capitalize the first letter, and the rest of the letters are in normal type, it’s much easier for eyes to capture when people are only looking at it for a second or two. This is proven marketing.

With numerous ads in the Real Estate Wanted section of the newspaper, how are house-sellers going to notice yours? Simple. Put a blank space at the top and bottom of the ad, so you’re actually going to be paying for a six-line add, even though you only have words in the middle four lines. A reader’s eyes will be drawn to that ad automatically. Your ad sticks out like a sore thumb.

Bandit Signs
The second most effective way to attract motivated sellers is bandit signs. These are the little road signs everyone’s seen driving around. The signs should be yellow with black lettering, 18 inches high by 24 inches wide, and you want to use the entire space of the sign for the information to stand out. And they are going to come with a little wire stake. The bandit sign is going to say exactly the same thing as your classified ad.

The downside to bandit signs is that some towns and cities may have ordinances that don’t allow them. You’ll have to check your local laws to see if this applies to where you live. I suggest you still order 100 bandit signs, put them up, and if there’s a problem, someone will let you know. You can claim ignorance, and you will definitely get a lot of calls from homeowners looking to sell. Bandit signs are worth the minimal risk.

Most people do not have the courage or the vision to put out the money to apply marketing strategies, and that’s why they don’t buy and sell houses, and make more money than they fear to lose. But one ad or bandit sign alone will get you at least 10 to 15 houses bought and sold per year, and it will save you the time and effort of going out
and looking for prospects.

Chances are, if you’re reading this you’re looking for an edge in real estate investing. If so, sign up to attend my free webinar and learn why 97% of real estate investors fail; and how to fix it by visiting, Webinar.TimTaylorSuccessCoach.com.

About Tim Taylor Real Estate Success Coach
Tim Taylor real estate success coach and author of both “Wealth with Purpose” and “The Compass Guide to Real Estate Fortunes with Tim Taylor” is an accomplished learner. He has been mentored by Robert Kiyosaki, Robert Allen, Ron LeGrand and James Ray and is now passing on the secrets he has come to know and practice onto select individuals with a burning desire to become successful real estate investors.

To request a Free 30 minute consultation to find out if you qualify for Tim Taylor’s Success Coaching Program go to http://www.TimTaylorSuccessCoach.com.

What do you really think of when you hear the term “real estate”? Do these words conjure images of luxurious dream houses and expensive cars, the fruits of wealth through successful investing? Do infomercials promising the life of your dreams come to mind? Or does real estate remind you of today’s headlines, with words like “crisis” dominating the discussion?

The truth is that no matter what the market, real estate investors with confidence and skill will still make money. For anyone considering entry into the real estate business, however, or for those who want to step up their game, the question isn’t how well one can possibly do in a down market. The real question is: do you believe that you can be a successful real estate investor? Do you know that you could become a millionaire within 3 years working less than 15 hours a week?

When it comes down to it, every human being has fears that hold us back—fears so innate within us that we’re barely aware of how much they control our decisions. I know, because for 12 long years, I did nothing about my dream of becoming a real estate investor. I chose not to pursue something that I was passionate about because following in my dad’s footsteps seemed like the more “logical” choice. Why take risks in real estate when you can get a job earning a steady paycheck?

Instead, I had followed my father’s path step by step through corporate America, earning several promotions in a steel manufacturing company. Within three years of starting, I grew the company’s profits eight times over. I was earning a great salary and had what seemed like a bright future ahead of me.

That is, until life gave me a clue that there really is no such thing as certainty. My father, after giving 33 years of his life to the same company he had always worked for, was FIRED. That hit me hard—I had mirrored his career almost exactly. If something like that could happen to him, it sure as heck could happen to me too. What I learned at that moment is that anything you do in life can be risky, especially if it entails putting your financial future in someone else’s hands.

If your chances are just the same, why not take actions toward the things that would really get you stoked in life, the things that you know would bring you happiness, wealth, and freedom?

When I was 18 and dreamt of a career in real estate—yet did nothing about it—I told myself all kinds of things; the same kinds of things people tell themselves today: “This won’t work for me. It may work for them, but it will never work for me. The market’s too tough. Prices are going down. How would I sell? I’m not good enough. I won’t succeed, I’ll look foolish and be embarrassed if I try this and fail.”

It took me 12 years to find the courage to go for it. And for the next 13 years after that, I studied under successful millionaire mentors, used every kind of buying and selling strategies, and have bought and sold over 300 houses during up and down markets. For those who know anything about real estate, a so called “crisis” can often signal a time of opportunity. It just takes getting over the fear factor and learning the most effective strategies to buy and sell (as well as when to apply them).

There are still plenty of reasons why real estate investing is a viable way to make tons of money and live a better quality of life. You still get more financial leverage than you would from other types of investments. You can be your own boss and make your own schedule. In fact, I became a millionaire in less than three years through real estate investing, putting in less than 15 hours of work per week while working a full-time job. Imagine what anyone can do if they put more time into it. I’ve narrowed down the process of developing a turnkey real estate business into Five Key Steps of Real Estate Investing, including:

1. Effective Marketing that attracts motivated sellers to call you.
2. Prescreening Sellers so you’re only spending your time working on qualified leads.
3. Buying & Selling Strategies—construct and present offers to buy homes, all six of which do not require any of our own money or credit.
4. Automated Follow-up System for leads that may have potential at a future time.
5. Sell Your Homes Quickly.

Many people have turned to this industry as a full time career, making millions of dollars in the process, including myself. Real estate investing is potentially the most rewarding option that provides excellent returns on your investments of time and energy, and the freedom and satisfaction of turning
your dreams into reality.

To learn more about turning your fears into focus, attend one of my free upcoming webinars by visiting Webinar.TimTaylorSuccessCoach.com.

About Tim Taylor Real Estate Success Coach
Tim Taylor real estate success coach and author of both “Wealth with Purpose” and “The Compass Guide to Real Estate Fortunes with Tim Taylor” is an accomplished learner. He has been mentored by Robert Kiyosaki, Robert Allen, Ron LeGrand and James Ray and is now passing on the secrets he has come to know and practice onto select individuals with a burning desire to become successful real estate investors.

To request a Free 30 minute consultation to find out if you qualify for Tim Taylor’s Success Coaching Program go to http://www.TimTaylorSuccessCoach.com.