Please Critique This Strategy
Let start by saying that I am a licensed re appraiser and sales agent (yes we do think we know it all 
) So here's your chance to vent your anger towrads agents/appraisers. (Hey being an appraiser makes you crazy since you are constantly being asked to commit fraud)
Anyway, I am just now getting started in real estate investment and would like your thoughts on this process that I believe would work for about every investement strategy.
After finding a "motivated seller" I would have them grant me an exclusive option to purchase for a few grand more than they owe, or price as the deal may dictate. A nominal option fee would be surrendered at signing. The option would grant me the right to lease the property under an master lease agreement, if so desired. Orignal "study period" term on option would be 30-60 days, and if deal checks out an 1-2 year extension with substantial option fee 2-3K to help with moving expenses etc.
After having title checked, verification of loan balanced etc. And assuming the seller doesn't have to be cashed out immediately....I would enter into an master lease agreement with monthly payments equal to loan payment made from me to bank. (no chance for seller to keep). Master lease agreement would of course grant me right to sublease or lease/option. (I think this is called a sandwhich lease option) The master lease would not trigger due on sale.
The way I see it the option agreement will just buy me time to check the deal out. If I can wholesale it great, otherwise if the deal still looks good I would lease option or if enough equity sell it retail myself. Try to go for a dual closing. About the only problem I see is if the seller wants to cash out quick. If i can't line up hardmoney fast or cheap enough then all i will be out is the nominal option fee.
I haven't bought any books or taken any courses in rei yet. Perhaps I should. Any comments or suggestions would be greatly appreciated. I am sure there is something that I am missing.
Kind regards.
jason cowan
We read your post 3 x's and still are confused. Here are the steps to lease option since you are new.
Begin with a marketing campaign:
Ad/flyer: "Stop renting, Rent-2-own, low down payment, EZ qualifyfamily neighborhood. Call to preview our inventory. 312-555-xxxx"
*Develop and approve via legal counsel any contracts
*Find a home/reasonable/motivated seller
*Perform appropriate due diligance on the property
*Determine exit strategy guideline to the deal
*Determine profitability
*Negotiate terms with seller
*Sign lease option (LO) or subject to (Sub2) agreement(s)
*Exchange monies/deposit/option fee
*Attorney contract review
*Show property to ad campaign candidates
*Repair or make cosmetic improvements
*Present YOUR landloard & lease option agreement to approved candidate
*Collect monies from tenant buyer
*Create necessary cash reserves
*Manage property as the landlord
*Review above process for errors, correct and repeat process for next deal
*Monitor exit strategy and adjust where necessary
*Increase list of qualified/approved tenant buyers
We realize this is simplified but the complexity is your homework!
Eric & Rosa
[addsig]