Should I get private Investor for a Lease Purchase

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Should I get Private Investor for a Lease Purchase?

Should I get Private Investor for a Lease Purchase?

In this video I answer a great question that I found on a message board. The question was, "Can you buy properties for long term hold with a partner?" Absolutely yes! In this video, I cover how to do it; what to say to private lenders; how to structure it and how to use hard money lenders versus a private investor/partner. Anyone can use hard money lenders to buy property. They are people that don't check your credits; they just look at the property value. The disadvantage to this is that the interest rates are high, they charge points and you have to put money down most of the time. If you do this, you may end up with a really big problem and that's "negative cash flow".

My style here isn't to buy an amazing deal that needs rehab and hold, but rather it is buying properties that need very little rehab and buying at significantly below market; throwing in a little carpet and some paint and then holding on to the long-term with some cash flow. It is good to structure a lease purchase deal by finding a property in a fantastic neighborhood and negotiating a price at 20% or more below market. Then stick a renter or a tenant-buyer (a tenant who basically will buy the property from us at a later date) into the property. This lease to own deal is an advantage as they pay cash up front to get into the property; a non-refundable option consideration. You can split this with your investor as they pay above market rents and your tenant-buyer will take care for all the maintenance on the property and hopefully will buy the property from you for an above market price down the line. Collect on option monies; collect more rent; and all during this time the loan balance is going down and over time, hopefully, the property will appreciate. You can repeat this lease option over and over and over.

This is a win-win scenario for investors; it only takes management of your partner/investor's expectations upfront to keep this venture. Know how to direct the project; how you manage it; and make sure you agree on an exit strategy upfront. Another way to structure this lease purchase would be to give the lender full ownership of the property. They have the title and the tax benefits, which puts them in a very secure position. Then get into a joint venture agreement; this basically splits all the profit 50/50: rent, cash flow, option money and profits from sale including loan pay down. Investors would keep getting the tax benefits. You record a trust deed on the property for your security. If they get a loan, record a second trust deed; if they pay cash, record a first trust deed. This makes it very secure for me. On the more advanced thinking, if my investor/partner ever got sued on the property, this trust deed actually protects my lender and my interest on the property. Having an asset protection is good and having a lien on the property will protect your interest.

So take heed on this tip. Make your investors win and help yourself build on your long-term equity. If there's a payment that was missed, it really doesn't come out of my pocket but out of my investors' and he will get paid back out of the cash flow. No stress.

Todd Toback


For Free Quick Start Workshops :
Go To: http://www.leasepurchasetv.com
Twitter: http://twitter.com/#!/toddtoback
Facebook: http://tinyurl.com/6tlc76v
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Category:

Education

Tags:

• Lease
• Purchasing
• Purchase
• Option