Real Estate Investing on a Budget

Many people fear getting into real estate because they think it takes tons of money to get started.  Although having money gives you more options there are ways to make good money without having a huge wallet.  If you are able to the steps correctly then you will be able to make a few thousand dollars per deal.

Cooperative lease options are a great way to get started in the real estate investing business.  These are rent to own deals where you put a tenant/buyer in a seller’s home and you get paid for it.  The deals can be very straight forward with little if any of your money involved.  The profits in these deals can bring you from $1,500 up to $10,000 per deal.  You won’t become a millionaire over night with these deals but a handful of deals a year would be a nice addition to any body’s bank account. 

They way cooperative lease options work is very simple.  What you are doing is taking control of a hard to sell home and putting in a tenant buyer who does not qualify for a mortgage.  The buyer pays YOU a nonrefundable deposit for the right to purchase the property at a determined later date.  You are making the seller happen because they have money coming in and a potential buyer for their home.

The first step is finding a seller who is willing to do a lease option on their property.  A large portion of these sellers have hard to sell homes.  There could be many reasons why their house isn’t selling but a lot of the time they are trying to get more for the house then the market will allow.  Finding these people is not that difficult in today’s economy.  You can look up for sale by owners or place classified ads to find them. 

Once you find a seller that is willing to do a lease option you need to get control of the property.  This means that you have an interest in the property so you can pass along that interest to someone else and get paid for it.  So you are basically going to have the seller give the option to lease to you with a clause that allows you to assign it to someone else.  When you have a lease option that you can assign then you are able to go out and find a tenant/buyer for the house.

Getting a tenant/buyer is not all that difficult nowadays.  You can simply put a sign in the yard that says it’s a rent to own.  Classified ads work wonders finding potential tenant/buyers.  The negotiation with the tenant buyer is fairly simple.  Your ads should specify the down payment, the monthly rent, and the final sale price.  When you put all the information in your ads then the potential tenant/buyers tend to qualify themselves. 

You get paid by the down payment which is called the option money.  This gives your option to buy the house to the tenant buyer.  At this point everybody should be happy and you should be done. 

This was a quick run down on how these deals work.  If you want more detailed information check out The Frustrated Investor or The Cooperative Purchase System on YouTube.  And always check with an agent, broker, and attorney when getting started so you know all the laws in your area.