Selling a Lease Purchase Contract

Below is a transcription of the video above:

Hi guys! This is Todd Toback with your lease purchase training session of the day. Today, I am going to talk about a lease purchase strategy known as the assignment. Now, what I like about the assignment strategy is that you can earn a nice chunk of cash up front and be completely done with the deal. In addition, you can create a nice stream of monthly cash flow.

Let’s say that we find a motivated seller with a nice property and needs to sell fast. OK! This seller has a property and it’s worth $300,000.00. He owes $280,000.00 and for all intensive purposes he doesn’t really have any equity.

He needs a higher payment then the average landlord on this property. Let’s say his mortgage payments on this property are $1900.00 a month. So we are unable to really negotiate a really low price because of what he owes. Let’s give the seller he wants. We will give him $1900.00 a month for the rent. We give him his price of $. 290,000; We don’t need to steal the property. We agree on a lease/option term of two years. With these numbers, you can see that there is not really a monthly profit because the rent is already kind of high. In addition, because of what is owed on the property, there really isn’t a huge spread on the back end either.

So, what can we do? We are going to sell this lease purchase contract to a third party. Have you ever have a cell phone company and in the middle of the contract the providers change? Have you ever had a bank loan and it changed from one bank to another. Assigning a contract is basically the same this. We take this contract and sell it to a third party and they take our place in every capacity and BOOM, we are done with the deal and on to the next deal!

Usually we would like to sell our contracts for about 3% of the purchase price of the home. So on a $300,000.00 property, we want to sell that contract for $9000.00. Now the great part is, I can take that $9000.00, I could wait for that and be done with the deal. Sometimes, I want to move a property quickly and someone comes to me and they want that property and they only have $5000.00 or $6000.00. So what do we do?

We take down the 5K or 6K and we create a note or promissory note for the rest of the money. We can create affordable monthly payments of $500 to a $1000 a month. We could bill automatically on a credit card or use PayPal. Don’t forget to use technology. It’s great to have all these tools at your disposal. We do it automatically. What I love about the assignment strategy is you do the deal and you are done with it and you are on the next one. If you are doing a lot of deals, this is the great way to go. If you wanna chat Lease Purchasing or want a free Lease Purchase Report, just give me a call (619) 464-2232.