Turn One Home into a Lifetime of Income!

The "Buy and Sell" Strategy

The basic approach is to find a motivated seller and buy under value. Remodel the home quickly and get it on the market for sale. Price the home well and hopefully sell it before carrying costs ate into your profit. This is the “Buy and Sell” approach sometimes referred to as “flipping”.

This approach carries several risks:

• Time: You could spend weeks or months looking for the right property at the right price. This lost time could have been invested into other profitable opportunities.
• Renovation Costs: Flipping a house almost always requires renovating or repairing, and quite often the investor has to spend more money than budgeted. These unexpected repairs can be very expensive and result in significant profit loss.
• Selling Time: The biggest risk is if the home doesn't sell fast enough after the repairs are completed. Each day a remodeled home sits on the market for sale without a buyer sucks more and more profit out of the deal.

The "Buy and Hold" Strategy

The goal of many real estate investors is to create long-term monthly income. This is the "Buy and Hold" approach. The real estate is purchased, then held over a long period of time and rented out. During this extended time the property appreciates while monthly costs are covered by tenants.

One of the best strategies for maximum monthly income with a "Buy and Hold" approach is to buy a property and pay it off quickly. With zero mortgage obligations, you get to keep the majority of the monthly rent. Depending on your living expenses, you could essentially become financially independent with just three or four homes.

Combine the "Buy and Sell" Strategy with the "Buy and Hold" Strategy

A real estate investor typically wants the best of both worlds. They want large checks and long-term wealth. You are in essence creating a job for yourself. What that means is that when you flip a home, you get paid. To get paid again, you have to go out and flip another home.

By blending the "Buy and Sell" and "Buy and Hold" approaches, you can get the best of both worlds:

1. Put your real estate investing on auto-pilot (not have to play landlord every day)
2. Receive a high monthly cash flow
3. Maintain the annual tax loss and qualify for the ability to sell homes with lower taxes at the time of the sale
4. Cash out and receive a substantial profit cheque within a few short years
5. Lock in your current equity
6. Lock in future appreciation increases
7. Get a large cheque (3%-5% of the value) from your properties within a few short weeks of your purchase and ownership

The way to do this is to invest in single-family homes, townhouses and condos in nice areas, and offer these homes under a short term Rent to Own program to a tenant/buyer.

What is Rent-to-Own?

You have your tenant sign a lease agreement for one, two or three years. During the time you have this lease agreement with the tenant, you also have a separate agreement that provides your tenant the option to buy your home at any point during the lease term for a pre-agreed selling price. The tenant has the option to buy the home, not the obligation. If they buy the home, they have to purchase at the agreed-upon price. If they don’t purchase at the end of their lease, you can continue renting to them or terminate the lease agreement.

There are many ways to structure the lease and option agreement that will substantially increase the odds that your tenant will buy the home outright during their tenancy. One of the best ways to increase your odds is to offer to credit a portion of their monthly rent payment toward their down payment if they should buy the home. So, in essence, during the lease term, your tenants are automatically saving money for the down payment.

The goal is to buy a home at least 10% below value and sell it to the tenant when the home appreciates by 10%.

The best part of a Rent-to-Own program is that you are not a landlord. Legally, you own the home during the lease period, but for all intents and purposes, you can consider it the tenant-buyer’s home. Your lease should state that they can’t make major alterations to the home without your approval, but you want them to make the home as nice as possible. You want them to paint the deck and add new landscaping. The more they invest into the home, the better the chances of them buying out at the end.

Hopefully, you can see how you can profit in real estate by starting with just a single home. The rise in homes on the market has given you the opportunity to add extra income each and every month, pay off your real estate investments quickly and lock in equity instantly and down the road.

To learn more about the Rent-to-Own strategy, contact The Better Group today.