Real Estate Open House – What Is a Lease Option – Part 3
We’re so close.. Today’s the day, this is the video where we break it down for you and show you exactly how you put the person in the house and take a check to the bank. Okay this is video number three in our series on how to do a lease option. In the last videos, we first started out by talking about why a lease option makes so much more sense than just doing a straight rental. In our last video, we talked about how you market to actually find people for the house and in this video, we’re going to talk about how you do an open house and the conversation that you have and how you basically seal the deal on a contract to get a contract for keys and a three five seven or $10,000 down payment. Steven, walk us through the open house. – The open house is so much fun. Now you’re not just going to be meeting there with one person, you’ve probably heard us do our little roleplay on how you talk on the phone and sending someone to a time where you’re going to be there. I will tell you right now, the open house, your goal is to get as many people to this open house as possible. Now you’re not talking about it as an open house over the phone with people, you’re not telling people, “Hey, come to my open house.” No, you’re only going to tell them, “Hey, I’ll meet you at the property.” “Hey, I’m going to meet you at the property.” Hey, I might have someone else there too but I want to meet you at the property at 7 p.m.” Because you want people there. Kris, why do we want as many people as possible there? – Well because there’s only one house but there’s multiple families that want it. So what that does is that really tells them that if you’re serious, you better get your game on. The less serious people are going to walk away, the more serious people are going to rise cream to the top and the first step of doing an open house is to go ahead and be friendly and meet people. Now I’m not going to shoot a video on how to smile and shake hands but for heaven’s sakes, be an approachable human being, show up gregarious, be friendly, be the first to shake your hand and when you get there, you’re going to be friendly and you’re going to tell them step two is to go check out the house which means, Steven, before we get into contracts and numbers, why do you want them actually walking through the house? I want them imagining, now you’ve all probably done this before, if you’ve ever bought a home or ever got into a new place or even bought a new product, you’re looking at it, you’re turning it around and you’re right, you’re imagining why, what you do with it. Well same thing with the house, you want them going through the rooms and imagining themselves in the rooms, you want them to have their kids there and say, you want the kids to be out doing the rooms and saying, “Hey, daddy this is this is my new room.” Right? You want them to imagine themselves in it and see themselves doing what they would normally do as a family right there in your home. – And you also want them to be really considering, is this home for us. So you don’t want to talk contract, you don’t want to talk shop, you want to just find out, is this the home? Could this be the one that is going to help your family get the opportunity that you need next in life? And so take the time. If you got five families, you might want to take the most interest in ones and walk around with them and spend a few minutes and then you know get some touches with a few other people, you might only have one family there, spend time with them, walk through, create a little bit of space but help them understand where things are, kind of talked about the benefits of the house and so you just want to do a real basic walkthrough so that we can then get to the conversation of, let’s talk a little bit of shop. Steven, what happens when they walk through the house? That’s the third step here is, now you know me, now you know the home, now let’s talk about the program and one of the things that I love is we do this flyer and this is something that you can create at home as well, you just put a flyer with some basic information, some of that information is going to communicate that you’re open-minded and you’re flexible. Right, we talked about those already, some of the previous videos, and you going to communicate some of the aspects of the program that you’re going to be doing, right? What is the lease option? How are you helping them? Well some of the verbage that we often use is, we help people build thousands of dollars of equity in a very short amount of time or hey we help people to stop throwing them away their money and rent it actually put it into a red tone so that they could build equity for themselves. – And then the last thing that the flyer is going to do is, it’s going to communicate a really important series of numbers and what we’re going to do here is, we might show on these numbers, this is what a $3,000 down payment looks like, this is what a $5,000 down payment looks like, this is what a $7,000 or $10,000 down payment looks like and next it’s going to show them what the payment is. Now if rent on a house is $1,100 in that area, then on a $10,000 down payment, I might show $1,200. I’m a little above market rent because they’ve given more down, it might be $1,300 if they’re only putting five grand down and it might be $1,4000 or even $1,500 if they put $3,000 down so we let them know here’s our flexibility, we got options, what you put down will determine what your monthly payment is and also what you put down is also going to determine the next column which is, how much equity can you build? Meaning, when you actually get into this home, every time you make a house payment, we’re going to actually credit something towards the future purchase price, this is really where you’re doing what banks do but you’re even doing it more aggressive, you know, a bank will give you a 30-year loan and they’re going to amortize it where all of its going to interest and you have to hold on to that home for fifteen years before you start actually having something go to principle. Here we’re going to say, wow, if you do the $10,000 option, we’re actually going to give you $200 a month that you pay on time towards the purchase, on this option it might be a hundred dollars and if you do the lowest option, it might be $25 dollars or it might be something really small and then the last thing that we’re going to be talking about here is, I got my down payments, I have the section here on what’s my, what are my payment options, how much am I actually going to be crediting back and Steven, what else do we need to communicate? – So over here, usually on a two-year period, we’ll just calculate it and we’re not going to do this right now but we’ll take the $3,000 times or plus the $25 over two years, right? Because typically, we’re signing a two-year contract with these individuals and we’ll just put the totals in this column here so they can see if I go into this deal and if I come into this home, I’m going to earn X amount of thousands of dollars of equity in this product. I’m not just throwing my cash away, I’m actually earning money. – So for example, a hundred dollars on two years is $24,000 plus the $5,000, that’s gonna show.. and here if I put $10,000 now but I get $200, then I’m going to be getting $48,000 with that, that’s $14,800 and when they go to buy the house, if they did this for two years, there’s $14,800, it’s going to be credited to them from whatever the purchase price is. Now Steven, I just want to talk for a moment about something important that people are wondering which is, what am I really signing the house for in the future? Like what if they want to buy it in a year, what if it two years, what if that two years they need to extend for another year? What will actually determine the purchase price? – Kris, this is the most beautiful part of the lease option system that we’ve put together because this is something that I’ve never seen anywhere else and you know, there are a lot of lease option systems that are predatory in nature, they try to take advantage of people and so they’ll set a purchase price that’s way above and beyond what it ever should be, out of reach, out of regions, it just doesn’t make sense.. – Unrealistic price. – You know, waving the wand and so for us we say, no let’s just let the market do what its going to do and so how do we do that? How do we set the prices? We don’t set a price, we’ll set the minimum price we talked about that earlier.. -That’s the protection piece that says, I can’t sell it below this or else I get hurt but we’ll allow an appraisal at that time to actually determine what the price will be. So by the way, the market has gone up $40,000 and they really want to buy it then we’re going to allow an appraisal to determine that price and as long as it is over the minimum, everything is safe. Now like Steven said, this is a pretty important innovation and you want to take note of that because in one of the things that you need to do next and the final step is, you’re going to find someone that says, I was friendly, I walked through the house, I looked at the numbers, I selected an option and then the fourth part here is, it’s time to do a contract. – Now this contract is super important, we’ve mentioned a few things in terms of the contract before. One of the most important parts of this contract that we have is that we do it in two different contracts, one is a lease agreement, just your standard rental lease agreement and the second one is an option agreement or you are buying the option to purchase the property.- Now if you’re going to be doing this on your own then make sure that you use a real estate lawyer, you’re not going to have to pay tons of fees but you need to sit down and say, I need help crafting two contracts. One of them is my rent contract, that one’s pretty standard, you can find that one but that rent contract needs to reference the option agreement, an option contract and you go to a lawyer and you basically say, alright, this is what I’m doing and I just need to write up a simple contract that is an addendum to the lease agreement and what it needs to do, that second contract basically says, number one, the purchase price will be determined by an appraisal at the time of purchase number two, there’s a minimum that this can’t go below so that you create safety. For example, if I owed 150 on the house and I had 5,000 repairs into it and I also wanted to secure 15,000 a profits, I might say that the purchase price is 170. So no matter what happens in the market, I can’t sell it below 170, that’s it. The third thing you need to tell your real-estate lawyer is that you need to take into account their consideration of what they’ve put in and what they’ve been building and I would also add that as long as payments are made on time, which we usually do on the 25th of the month because your payment with the bank is due on the 1st, I want a buffer of collecting and then paying. Make sure that’s in the contract and if you have those basic elements, your lawyer will have some other suggestions. Our contracts have very specific suggestions but we’re really noting the most important things and a lawyer, you could pay a price, get that contract drawn up and then all of a sudden, you’re good to go to actually fully execute your lease option and this is the best part, you get that signed contract, you collect the deposit, you collect the first month’s rent and at that point when you give them the keys, guys, this is really a self-managed deal, you just check in to collect the money, make sure everything’s going great, they’re going to handle repairs, they’re going to take care of the home, you might hear from them very very little and in two years, maybe a couple months before their two years is up, you’re going to start saying, “Hey, how are we doing? Is it time for you to buy yet? Do you know do you need to extend?” It’s going to be more money down payment and hopefully they go to buy the house and then you get to cash in on all of these gains and that’s what we’re doing here in the second part of how you go from from an open house all the way to finding someone for your home. Now friends, this is the end of the third video and I want to tell you what’s happening in the fourth video. So here’s what we’re going to be doing in our fourth and final video on lease options.. Now that you understand what it is and why it’s beneficial, now that you know how to market it, now that you know actually how to sell it, the last and final part is, okay, Kris, I don’t have a house but if I don’t have a property, how do I get a property to do this with? Like, do I need to pay $20,000 or $50,000 down payment and qualify with the bank and then this whole system doesn’t work? Friends, if you don’t have money for a house or you don’t have the credit or you have money but you’re looking for a more intelligent purchase strategy? Our fourth video is going to be on sandwich leases. This video is going to be about how do you actually buy a house with this exact same system with up to no money, no credit and at this point, if you’re watching this thinking, well guys I have a house or I really want to just get started, I want you to watch that next video but you can absolutely click the link, and when it comes to having the Flyers, when it comes to having the contracts, when it actually has, you know, you want to have the entire system laid out, we hope that this is giving you an incredible amount of knowledge and that you can run with it but for those of you that really want the hand-holding, if you want Steven and I to guide you through every step of the process and if you want to get live with us in our community where we’ll provide you the the support that you need and make sure that we can reach out, review your contracts, give you the contracts, give you the flyers, if you really want the hand-holding, we do provide that so click that link and we’ll get you that information otherwise, we’re going to see you on the fourth and final video where we’re gonna talk about how you get these homes with no money, no credit on a sandwich lease. Are you starting to see why I absolutely love the system? Do you understand why I love this strategy? Click the link, now is the time for you to say, “Kris, how can I work with you? How can I work with your team?” It’s an option, you can figure out how to do it on your own but guess what? We are doing this live everyday with people and they’re crushing it and you should too. I don’t care how old or young you are, I don’t care how much or how little you money you got because when I was 22, I was young and nobody believed in me, lease options secured my first million dollars and it can do that for you too right now. Click the link and get more information.