Things You'll Need:
- Proper lease option contracts specific to your state laws.
- Assignment of agreement contract.
- Motivated Seller
- Prospective Buyer
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Step 1
To make this work you need to first find a property and owner who is motivated and open to make a deal with a creative buyer with a lease option. What I mean is the seller might have tried to sell traditionally with a realtor and failed. The seller could be advertising to rent the property out as well. Bottom line is they need a solution that will give them either monthly payments or an immediate sale. Find this seller by calling on ads, locating abandoned properties and calling on properties for rent by owner.
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Step 2
Once you locate a property and a seller willing to listen to your proposed solution work out the following terms. You need to agree to a monthly payment (just like lease contract) a purchase price (just like a sales contract) and an agreed to length of contract. This is typically 1-5 years. You also need to have the right to sublet this property at any time. The key to this step is negotiating better terms which will get you more money. Ex: lease payment: $1000, Purchase Price: $100k, length of contract: 3 years.
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Step 3
Once both you and the seller agree to the terms above, both sign the contracts (lease agreement & option to purchase agreement)now you need to market the property. You need to advertise the property explaining the benefits and terms agreed with by the owner. This is an important step because all you hold is a liability until you find a buyer. Marketing efforts here will pay dividends.
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Step 4
Once you locate a buyer you need to set a price to sell him in essence the value of the terms between you and the seller. The terms explained in step 2 is the value you created. You need to come to an agreement with the prospective buyer as to a payment you will receive in exchange to "assigning" or "flipping" the contract to Mr. Buyer. That is your profit, the amount you receive for the right for Mr. Buyer to get the contract you agreed with Mr.Seller.
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Step 5
After you agree on the amount paid to you, you need to both sign an assignment of agreement contract. This will transfer all interest from you to the buyer. You may need to have the homeowner sign this too. I would suggest your payement be in cash or a cashier's check not a personal check. You now need to go to the bank and deposit your well earned money!
