Everyone is aware that those so-called fixer-uppers could normally be obtained at below market prices. That’s the great thing. The not-so-good news is that even purchasing a fixer-upper calls for money, which lots of novice property investors just don’t have available.
One answer is to use a lease option to acquire a fixer-upper property, make make payments in cash every month while you’re performing repairs on the real property, and then turn around and sell the house to a new buyer for profit before the lease option period expires. It’s generally beneficial to try to tie up the real property for at least six to nine months, in order to give yourself or your subcontractors sufficient opportunity to complete the repairs and then for a home purchaser to acquire and close on the home before your lease option is up.
If the property is so beat-up as to be unlivable, think about proposing to the owner a lower rent, but insist that all of the rent be employed to the purchase price at closing. This is a terrific way to get a considerable equity position in the real property without putting much cash down in the first place. That likewise permits you to take your investment money and employ it for repairs.
An offshoot of this strategy is to find a person who is handy with tools to rent the home with the purpose of purchasing at the end of the option time period. Each and every agreement is distinct, but you could offer 100% of their rent to go toward their down payment, especially if you’re acquiring that agreement on the underlying lease.
Selling this concept to the property seller is usually much easier than you might expect. After all, you are going to be fixing up the house substantially, hoping recovering your investment and making a profit. If you fail to accomplish that, what’s the worst thing that can happen, from the property seller’s perspective? They get the home back, with at least some, and possibly a healthy amount of the required repairs and upgrades finished, thereby maximizing the value and desirability of the real property!
Thus, if you have big ideas about becoming a realty investor, but find yourself short on cash to get started, one outstanding way can be to think about finding a fixer-upper and then offering the home seller a lease option agreement. It could prove to be a win-win for everyone. The home sellers get their money, the buyer receives a nicely revamped home, and you get to keep a hefty profit, without having to put a significant amount of money!