1. With Christopher Seder & David Streeter, Esq.

2. $40k Flips Agenda
Core classes every Tuesday and Thursday at 2pm EST/11am PAC
Core 1: FUNDING
Core 8: OUTSOURCING IMPROVEMENTS
Core 2: FUNDING
Core 9: PROPERTY LAUNCHES
Core 3: FUNDING
Core 10: CLOSING
Core 4: FUNDING
Core 11: TRACK YOUR CASH
Core 5: DEALS
Core 12: BUYERS
Core 6: DEALS
Core 13: BUYERS
Core 7: OUTSOURCING IMPROVEMENTS
Core 14: ALTERNATE EXIT STRATEGIES

3. Need Help? General Support Questions
Click the “Support” tab on your $40k Members site to visit our Customer Support Portal
Call us at
us at

4. Selling on Rent to Own/Lease Option
Why Sell on Rent To Own?
Long Term Wealth is created by owning high quality, high equity, passive cash flowing assets like businesses and real estate.

5. 4 Big Things that Sell a Home FAST
PRICE – We set a price that is fair, market supported and attractive to buyers.
CLEANLINESS / STAGING - This is an often overlooked, critical component in selling a home. The property CANNOT need any updates or repairs. Needs to be in perfect condition to sell for TOP DOLLAR!
MARKETING – Our Property Launch Marketing will astound you.
CREATIVE FINANCING - Offer the property with creative financing. “NO BANK LOANS NEEDED”

6. Scenario: Retail Sale of $40k Flip
$150,000 – List Price (Realistic Saleable ARV)
Drop price, drop price, drop price!
$132,000 – Sale Price
-$8,100 – 6% Commission to both agents
-$4,000 – Seller Closing Costs
-$4,050 – Seller Concession 3%
($16,150 – Seller Costs)
$115,850 - Net Check from Title Company
Remember this number because we will come back to it.
What are you into it for?

7. Scenario: Rental (No Thanks)
$150,000 – List Price
Drop Price, Drop Price, Drop Price!
Decision To Rent It
Market For Sale Craigslist, MLS, Post, Repost Ads Daily
Show Property Over and Over - Deal With No Shows and Time Wasters
30-90 Day Vacancy Looking For A Tenant
Screening: Credit Verification, Job Verification, Criminal History, Reference Checks
Then collect the rent and chase people down and hope they don’t destroy your house

8. Seller {Landlord} Expenses When Renting
8% Vacancy Fee
One month vacancy
At Least 1 month out of 12 house will be vacant
Every month vacant is money lost
5-10% Management Fee
Property Management Company Example
$75 - $100 a month per unit
5-10% Maintenance Fee
Including Water/Sewer/Grass/Snow/ Garbage Pick Up
Appliances

9. What is a Lease with Option To Buy?
Rental Agreement
Plus an “Pre-Agreed Upon” sale of the property in the next 6 to 24 months
Buyers put non-refundable option money down that they don’t want to lose
Buyers are responsible for all upkeep, utilities, repairs and maintenance.
Buyers get approved for mortgage and buy ASAP.

10. Why Are Lease Options Working?
Banks are still tight with lending criteria, so there’s an abundance of buyers who want the rent to own option
They have cash with damaged credit
They are not as choosy as a retail buyer and willing to accept the circumstances and get into nearly any home that’s offered as rent to own
There’s an abundance of buyer’s repairing their credit from foreclosures during the meltdown

11. Top 3 Seller Questions When Selling on Rent To Own
What If Major Damage Occurs?
Mindset – The buyers are “owners” not renters
They actually improve property
Mentality - Why would I purposely damage my own house?
Skin In The Game - Large down payment
Hazard Insurance – Landlord and renters policy
Midnight Move Out
They move out with notice
Just re-sell it
Seller keeps the option deposit
Money Collection {Rent and Monthly rent}
Angelo Russo, Avalon Escrow Company (Around $50/month)
Title company can collect

12. 5 Parts of a Lease Option Contract
1. Rental Agreement
1 Year, With 1 Year Option To Continue
Utilities Included And Paid By The Buyer
10% Late Fee If Rent Paid After 5th Of Month
2. Option Money
$5,000 or 5% Of Purchase Price which ever is higher
3. Future Purchase Price
Seller typically gets full asking price
4. Rent Credits
10% Of The Rent Rate
Incentive for tenant buyer to pay rent on time and eventually buy
5. Commission
Paid By The Seller
½ of 1st months rent + 3% when it transfers (Attach a Broker’s Lien)

13. Tenant Buyer Writes 2 Checks
All Checks Paid “Avalon Escrow”
1. Option Deposit
Applied as Down Payment
First month’s rent – Ex: $1,250
Rent Credit - 10% per month
Applied
Reduces the Sales Price OR
Applied To Down Payment
Applied to Closing Costs

14. The Closing
The Real Estate Attorney or Property Management Company handles the payment collection
Protects the seller and buyer
Makes buyer pay on time (ACH withdraw)
Makes sure seller pays the mortgage and doesn’t go into foreclosure
The real Estate attorney or property management company charges $50 month
Buyers pays for this service

15. The Hook For Buyers
Once a buyer realizes they can own instead of rent they will beat down our doors to own your home.
All interested buyer’s MUST pre-qualify with our mortgage company so we can control their credit repair and ultimate purchase.
NATIONS LENDING CORP
CREDIT REPAIR RESOURCES
We tell buyers: “If you want to tie up this property, you need to put down $1,000 in earnest money to lock it up. Are you ready to lock up this property?”

16. Scenario: Lease Option Sale
$150,000 Future Sale Price – FULL ASKING PRICE
-$7,500 Now – Option Deposit Non- Refundable
-$4,000 Seller Concession 2.5% To The Buyer (rent credits)
-$4,000 Seller Closing Costs
-$4,500 Sellers Agent Commission (3% Of $150k)
= $130,000 NET PROCEEDS from the sale in the future
+$7500 TODAY From Buyer
= $137,500 NET PROCEEDS In Their Pocket
+ “Margin Over Payment” $250 /Mo For 2 Years = $6,000 Cash Flow Proceeds
+ Principal Pay down = $200 / Mo = $4,800 Principal Pay Down
+ Depreciation = 3.5% Value = $5250 BENEFIT!!!!! Per Year!!!!!!!
$3500 Tax Savings = $10, % Tax Bracket (Includes Fed, State and Local)
= $151,800 Net Net Over Course Of 2 Year Agreement
+ lower tax capital gains rates vs. ordinary income rates
**All number are approximate

17. Scenario: Retail Sale $150,000 – List Price (Realistic Saleable ARV)
Drop price, drop price, drop price!
$132,000 – Sale Price
-$8,100 – 6% Commission to both agents
-$4,000 – Seller Closing Costs
-$4,050 – Seller Concession 3%
($16,150 – Seller Costs)
$115,850 - Net Check from Title Company
Remember this number because we will come back to it…
Scenario $82,000 + Funding 12% ($3,280) = $85,280
Net Profit = $115,850 - $85,280 = $30,570
THIS DOESN’T SUCK! But…

18. Scenario: Lease Option Sale
Retail Sale
$115,850 Net Check from Title Company
Lease Option Sale
$151,800 Net Over Course Of 2 Year Agreement
+ lower tax capital gains rates vs. ordinary income rates
**All number are approximate

19. Alternate Exit Strategies
Buy And Fix With Private Money OR SFF Money
Launch The Property
Advertise “For Sale” & “Rent To Own”
Secure A “Rent To Own” Buyer Contract & Close
Apply To A Local “Brick and Mortar” Bank & Complete A “Refi”
They will want to see the property is occupied
Payoff Private Funding Partner with Bank Loan
Go from 12% to 4.5% interest

20. Alternate Exit Strategies
Go to the “Brick and Mortar” Bank & Complete A “Refi”
Banks will want all the normal mortgage info
Assets
Income
W-2’s
Good credit (600+)
They like high equity
Only want to give a 70% loan to Value
They prefer 6 months of ownership prior to “Refi”
Debt to Income Ratio
40% - 42%

21. Alternate Exit Strategies
Local And Regional Community Banks
“Who Portfolio Their Own Loans”
First Fed of Lakewood
3rd Federal
Catholic Credit Union, Vacation Land Credit Union
Do Not Go To The Large FNMA, FDMC Lenders
They Can Only Loan Up To 10 Per Borrower
FNMA = 10 loans per borrower
FDMC = 4 loans per borrower
Local Regional Banks Will Do 30 Loans Per Borrower or More
Local Regional Banks Will Lend To LLC’s or Corp’s
Local Regional Banks Will Lend $3.0 Million Plus To One Borrower

22. Alternate Exit Strategies
First Federal of Lakewood
Up To 15 Loans Per Borrower
% LTV
Refi Based on After Repaired Value

23. Alternate Exit Strategies
Rule of Thumb
Every $100,000 Financed = $750 a month payment for P.I.T.I.

24. Alternate Exit Strategies
Marketing Strategies for Rent-to-Own Buyers
We hire real estate agents to do all our rent-to-own marketing
You should, too
“For Sale / Rent To Own”
Commission = ½ of 1st months mortgage payment + 3% when it closes (in 6– 24 months)

25. Alternate Exit Strategies
MLS Listing goes in “For Sale” & “For Rent” Sections of MLS
All the same strategies we use in Property Launches and our 67 Point Marketing Plan
Pay Per Click Advertising: Google and Facebook
Websites / Property Syndication,
Craigslist (For Sale & For Rent Sections)
White Corrugated Signs
Just add: “BAD CREDIT OK / NO BANK FINANCING NEEDED / BUILD EQUITY AS YOU RENT!”

26. Alternate Exit Strategies

27. Alternate Exit Strategies
Qualifying Rent To Own Buyers
Have them fill out an application:
Applicant pulls their own credit and gives us credit report
Verify job
Check previous landlords
$5k or 5% down (whichever is greater) at minimum

29. Alternate Exit Strategies
Qualifying Rent To Own Buyers
Earnest money deposit
$1,000 down (credit towards purchase)
When they we write the contract, they cut a check

30. Alternate Exit Strategies
Rent-to-Own Disclosures
Provide all potential buyers a property disclosure document just like a regular listing
Required by real estate law
What’s wrong with the property? (if anything)

31. Alternate Exit Strategies
Once Letter Of Intent is signed, it’s handed off to closing attorney
Closing attorney creates the rental agreement and option to purchase agreement
AT CLOSING: Closing attorney also sets up auto-draft from buyer to pay sellers mortgage
AT CLOSING: Closing attorney distributes money based on “Disbursement Sheet” (similar to HUD 1 for “table top” closings)

35. Questions?

36. Flip & Fund Summit 6
Early Bird tickets still available at $297 for $40k Flips students
Key note speakers featuring “Mr. Wonderful” Kevin O’Leary from ABC’s Shark Tank and VP of RealtyTrac, Daren Blomquist
October in Dallas, Texas at the breathtaking Dallas Renaissance

37. Keep the Momentum Going…
Have you thought about what's next?
If you are a serious, motivated real estate investor who's hungry for more, consider looking into our one-on-one coaching program. Each package is uniquely built based on you and your business goals.
Visit to apply now!