Show Summary
Hey, I’m excited to have my buddy John Jackson here! Today, we are going to talk about lease options and creative financing! There are opportunities and benefits for you to wrap in your business if you’re running a traditional wholesale and rehabbing business and that’s what we are going to talk about today!
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FlipNerd Show Transcript:
[00:00:00] Mike: [00:00:00] Hey everybody. Welcome back to the show.Excited to have my buddy John Jackson here today. We’re going to talk about lease options. I’ve been in this business for 12 years. I kind of regret not doing lease options and creative financing stuff from the very beginning. Uh, but I see the opportunity and the benefit for you to wrap these into your business.
If you’re running a traditional wholesale and a whole and rehabbing type business, and that’s what we’re going to talk about today is lease options. You can even do them in Texas
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Fulfilling lives for all of those around us on today’s show, we’re going to continue our [00:01:00] conversation, fueling our businesses and fueling our lives. I’m glad you’re here.
Hey John. Welcome to the show.
John: [00:01:14] Hey Mike. Hey, what’s going on? Hey, thanks sir. Thanks for having me. And, uh, Uh, yes, you can do lease options in Texas, and you’re not the only investor that says, boy, I wish I would have done more, uh, creative stuff for more lease options, you know, over the years, you know?
Mike: [00:01:28] Yeah. I think at the end of the day, um, I think what’s happened is as the markets of volunteer is, is, and there’s this, every cycle is like this, right?
Every kind of cycle where you’re getting into a time where it’s more of a buyer’s market, which. It’s still a pretty much a sellers market because the COVID, COVID helped kind of cement that there’s not a lot of inventory on the market, but I think we all think we’re going towards a downshift in the market, but the end of the day, um, you know, I think as you get a little more wisdom in your business, you learn along the way.
If you’re not already doing them, you’re like, I [00:02:00] need to find more ways to monetize the leads I already have. Right. Cause I, I spent money on that. So how can I make money on these that isn’t going to cost you more money to generate them? Right? Like how else, how do I, uh, Kind of monetize my waste if you will, right.
At a minimum. Right. But, so I think it’s even a bigger deal than that and what a lot of people kind of realize. So
John: [00:02:18] yeah. You know, and you know, we’re just, before we got on this call, you know, we’re just talking about a cost of acquisition, cost of leaves. And, uh, you know, I’ve been around long enough to see that number go up, you know, the, just the cost of a lead we had, uh, you know, well, people have to understand as a lead.
There’s nothing more than somebody acknowledging yours existence. That’s all it is, right? It’s it’s not a, it’s not someone saying, Hey, let’s definitely do business. They’re just kind of reaching, they’re sticking their toes in the water going well, what’s this all about? Or how can you help me? Let me see.
And that’s the lead right in. So we look at our marketing costs and the cost per [00:03:00] lead is certainly one of the things we look at. So we’re looking at what we’re looking at is costs to have some records nice that we exist. Right. And then from there obviously to acquisition, you know, to contract to acquisition and, and so, you know, starting that in the.
Real estate world is a business. We have to see, we have to make sure that we’re capturing as many leads as we can for the least amount of money capturing as many deals as we can for the least amount of money. And so for people, whether you’re just starting off or someone’s doing this, you know, on a big scale, you’re looking at, uh, spending money on marketing.
And so we’re always looking at how can we decrease our marketing costs or how can we get, how can we increase our ROI? And it’s. Getting so expensive to do the marketing. And so, especially for the players out there that are doing, you know, two, three, four, 5,009,000 a month for drugs, blackmail or whatever marketing that is what happens is this, all these leads come in, right?
All this lead flow comes in and now you’ve got to take these leads and [00:04:00] put them in a different as I call them buckets. And what are those buckets? Those buckets are. What type of lead is this, in other words, is it, is it a potential subject to, is it a wholesale deal? Is it a, is it a cash offer? Uh, or, or is it some other thing?
Right. And what I have found is that most leads come in. You’re going to fit into a couple of, couple of buckets anyway, what I’m just going to be a wholesale, or if you do fix and flip a fix and flip a lead, or to be honest with you, at least option lead. Hmm. So there’s a tremendous number of leads that would be great for a lease option, but most people in real estate don’t understand the dynamics of a, of a lease option or how it works.
And so they just look at this bucket. Well, that’s trash, they throw it out. Right. So I tell wholesalers, let me turn your trash into cash. Right.
Mike: [00:04:51] That sounds catchy. You should trademark that. Uh, I’m sure. I’m sure that’s already trademarked
John: [00:04:55] Myron. Golden is the, is the trash man. He’s the turn, the trash into cash [00:05:00] real estate, but I think it’s already taken, but show wholesalers how to trim their trash weeds into cash.
And the thing is, is that, um, As we were talking about before we got started here, um, uh, I’m doing a present for your million dollar a meeting, which by the time this airs it’ll already be in the past. Yes. But it’s about lease options. Lease options are simple, not sexy. And why do you not hear more about people doing lease options?
Uh, and I think part of is because they’re just not sure. Sexy. And when I say sexy, I mean, in the sense of you don’t, you don’t see someone on Facebook posting about, Hey, I just sent off an email and did another deal. Copy paste. No hustle, no grind, mess clothes or whatever. You know, you see everybody posting on Facebook.
Well, Hey, don’t at this cashier’s check and all, I’m a hustler. I’m a grinder. You know, who else is up at 4:00 AM grind and up all night grinding. That’s not me. Right. I, uh,
Mike: [00:05:58] they don’t realize it yet, but that’s not [00:06:00] sexy either. Yeah,
John: [00:06:02] it may. It may make you sound like you’re growing
Mike: [00:06:04] young. Those are like a.
Teenagers in terms of real estate speak. Like they don’t quite understand that that’s not cool yet.
John: [00:06:10] Exactly, exactly. That’s going to cause burnout. So with what I do and what I teach with lease options, each transaction takes about an hour to maybe an hour and a half total of time. Um, it probably closer to an hour and that’s just depends on whether I’m going to go see the property or not.
So, um, you know, like I was telling you before this call, so my niche is lease options. Now I do some wholesaling. Uh, I’m not a big fan of wholesaling for me. It’s this not my special cup of tea, but just this week I’ve gotten two wholesale leads. That, uh, um, that as I’m working them, I’m realizing, Oh my gosh, this is, this is why I do lease options because lease options are so easy.
Each wholesale need is unique and individual, [00:07:00] and the numbers are different. The property’s different with the lease options. It’s so cookie cutter, it’s just, here’s the number. Boom. There you go. Yep. You want to do it or not? Couldn’t you?
Mike: [00:07:09] Uh,
John: [00:07:10] let’s talk a little bit about,
Mike: [00:07:11] I have a question that I want to ask.
Um, but I think first maybe just for, in case anybody’s listening right now and they don’t quite understand what a lease option is. And I, I think it’s just. It’s not as mainstream as traditional wholesaling. Right. And that’s why they’re not sexy because not a lot of people, I’m sure there’s a ton of people that know what they are.
There’s some people doing them, but it’s just not as mainstream. But the question on the back end of that is could you also just do a lease option with those wholesale deals or is it the person wants to get their money a lot faster? They don’t want to wait out. To see if somebody wants to exercise the option on the back end of
John: [00:07:43] that.
But first, why don’t you just kind of tell us
Mike: [00:07:45] what a, what a lease option is and the way that you do them, right? You, you do them a little bit differently. There’s a lot of ways to do one, but yours is a little bit different. And one thing that I want to just kind of yep. To make this a little bit sexier, that kind of got me excited when we talked about this a little while back is that I was a bit [00:08:00] surprised to see that your average kind of margin is.
Probably pretty close to a traditional wholesale fee and you happen to be in the Dallas Fort worth market. But so I think a lot of people are like, Oh, I can do these little things and make two or three grand, but you’re making way more than that. And so that might make it a little bit sexier for people that aren’t doing them right now.
John: [00:08:17] Yeah. So, so our average, uh, transaction, and I’ve got students all across the U S and no matter where they are in the U S uh, there. Averaging really 10 to $12,000 per transaction. Again, these are deals that we don’t have to go see. We don’t have to meet the seller. There’s no estimate and repairs or anything.
Cause these are moving ready houses. So these are nice houses moving. Ready. A lot of them they’re already trying to sell the house and a lot of them are older are owner occupied. Right? And so they’re moving. Ready. They were averaging 10 to $12,000 per deal, depending where you live it, maybe a little bit, you know, a little bit more than that.
Um, [00:09:00] uh, but yeah, so that’s about the average per deal and that’s, uh, kind of across the board. Uh, so yeah, you’re talking about, about the same as a lot of assignment fees for, uh, for wholesale. Yeah. Yeah. Now,
Mike: [00:09:10] now you’re dealing with houses that are nicer, that you sell into a, I won’t say a traditional buyer because they they’ve got probably some financial issues, but.
Um, you’re in and out of there a lot easier and faster than, than a lot of people deal with with, with, even with wholesale deals. So, so tell us, can maybe keep it like a little bit of an option, not an option, a, a example of like a deal.
John: [00:09:32] Yeah. So it’s why they did it and
Mike: [00:09:33] why they did it too.
John: [00:09:34] Okay. So, so great example.
A deal that we just closed. Um, well actually I’m looking as, as, as we speak a deal, we’re about to close here. The cashier’s check there, uh, the, for the earnest money that was from a builder. I was a rehab or I’m sorry, he’s a rehab on that one. So I’ll just say here’s a perfect example, literally that we’re, I’m gonna be wrapping up next week, um, where the rehabber [00:10:00] bought the property, rehab it and, and it’s sitting on the market.
Right for whatever it’s been. I don’t know this picker house. Yeah. Over 60 days. Uh, probably closer over 90 days. So it’s sitting there and, you know, as someone who’s done a lot of work, uh, you know, that’s the longer it sits, the more it’s costing you. Yep. So, uh, so this and this case, this rehabber had this house sitting there empty.
Uh, we came along with the lease purchase. It’s going to stop the bleeding. They’re going to get full price and there’s no commission. Uh, so that’s that case. Uh, normally what we’re working with, the sellers that are looking for a plan B, this, this rehabber, they were looking for a plan B because plan a. Is you stick a sign in the yard, full price, full price, and someone comes along.
So this is great. I’ll give you full price, no haggling. Well, when that doesn’t work, 30 days, 60 days, 90 days later, you start looking for plan B. [00:11:00] Well, how many, uh, how many houses are rentals now? Just saying only because the owner couldn’t sell. Right? So there’s a saying in day trading. Uh, my background is a day trader and stock trader.
There’s the same with the stock trading. That a longterm hold is a day trade gone bad. And that is so true with real estate. Look at rocket. And I don’t know if you ever had anything like this or not Mike, but I don’t know how many investors have a rental. Now there was supposed to be a flip. Yup. No doubt.
Right. And it just didn’t work out. I’ve got
Mike: [00:11:36] a couple of those. That’s not a good, sustainable strategy, but I do have, I’ve got a few of those in the I’m. Sure.
John: [00:11:41] Yeah. Yeah, exactly. So what’s a longterm Moza day Drake on bed. So, so an individual homeowner has a house we’re trying to sell it. Hasn’t sold.
They’ve got to go to plan B. We are the plan B cause they’re getting full price, no commission. And it’s a short term lease purchase.
Mike: [00:11:57] And that, so in that example, it’s it wouldn’t [00:12:00] sell. With through plan a right. They’ve got it listed. And that’s because they’ve either got it. Okay. Overpriced or there’s something wrong with us.
Cause a lot of houses are selling like that these days. Right? Cause there’s not a lot of inventory. So there’s something about the house that is making it not sell, but you go to kind of a more non traditional buyer. That’s probably credit challenged or can’t go do a traditional deal right now and help them improve their credit and put some wheels in motion so that they can basically exercise their option after some period of time.
And that other person gets out,
John: [00:12:30] right? Yeah. So, so let’s talk about the silver side. There was talking about the buyer such are the sellers. The sellers are getting are people that are trying to sell their house, but they haven’t been able to. Uh, and so, you know, they, they’ve got to come up with a plan B, we come along, they’re going to get full price, no commission, no haggling, uh, in a short term, short term at 12 months lease purchase on the buying side.
These are people that it’s a husband, wife and their kids, uh, that are trying to buy a house [00:13:00] that maybe a little bit of time to get finance, then may have some credit issues. They may not. Uh, we, uh, two weeks ago we had, I think four or five applications, uh, come in on a weekend. And three of those applications all had scores above six 50, so they were good to go for finance.
They just wanted to buy a time. Uh, no. Uh, so for example, maybe they’re trying to get here from relocate, from out of town and they don’t have, they don’t have to come up with here’s years of tax returns. Uh, go drive around for weekend on in looking at houses after house, after house. And they just want to get the kids in schools, start the job, get everything moved and say, okay.
Now less now let’s get finance, right? Yeah. So that’s where your traditional, uh, least purchase buyer is. We do have some of those that have some credit issues, but we look for people that are very close to finance or where to go
Mike: [00:13:54] folks that have seller finance models, some friends of ours, even, even me, honestly.
Yeah. Well, every deal I’ve seller [00:14:00] financed. I’m kind of selling it to, uh, the folks that will probably never have good credit. That’s that’s how I’ve done it traditionally. Right? It’s like, I haven’t even fixed the houses up. I’m just selling to people that probably have no established credit are really bad, but they had enough cash to put down.
That’s not who you’re going after. You’re going after the people that are either there or real close. Sometimes entrepreneurs probably right. That have some, you know, don’t have two years of solid tax returns, but they’re making money. It’s just, they’re not ready for a traditional. Uh, I guess mortgage.
John: [00:14:29] Yeah, right. Absolutely. Yes. So, so the traditional buyer, the traditional house and the traditional buyer for over finance is totally different. Yeah. So we’re working with nice houses and people that are very close to finance. So imagine this, imagine a you’re talking about owner financing stuff. Here’s the difference.
If you can visualize this, uh, the difference is this is the owner finance. Uh, imagine there’s a car that doesn’t work. So great. Beer is a used car lot, [00:15:00] and you’re trying to sell this car. Doesn’t work so great. No credit, no problem. With as long as you got some money down and we’ll tote the note, right?
That’s what our finance, what I do is at least hops world is like leasing a BMW or leasing a Mercedes. So I’ve got a nice product. That’s a beautiful product and meaning the house and the bottom buyers are people that just want to try it and buy it. Right. Would you get really the delay? It just gives them some time, uh, you know, to get things in place, but, but going down on that path of that analogy, that’s really what it was option is.
If you’ve ever leased a car, you actually had a lease option on that car. You leased it with the option to buy it at a set price, same thing with this, you’re leasing a house. With the option to buy it as that price. Yep. And so that’s exactly what we saw options and that’s why a lot of people are getting, you know, what’s what the buyers look to get into at least.
Huh.
Mike: [00:15:55] And the seller likes it. Cause in your instance there, have they tried to sell it? They’re still getting paid. [00:16:00] They still have payments and taxes and everything every month. And they’re like, Hey, this isn’t really, it’s not what I wanted to do. But if I had to go to play and be like, Hey, at least it’s going to stop the bleeding.
I don’t have an expense anymore. And then hopefully at the end of that 12 month period, the person will exercise the option and actually buy it. And then there completely, and they’re going to go get a traditional mortgage,
John: [00:16:19] right? Yeah, absolutely.
Mike: [00:16:20] And I know you, cause we’ve, we’ve talked about this before.
Um, you have a really high percentage of people that kind of exercise that option at the end of the 12 months. Right. I know for my owner finance deals, like I honestly, I want to be the bank for 30 years. Like I don’t ever want them cause I make money by being the bank. That’s not what these people want and that’s not what the buyers you bring in.
Want either. So you have a pretty high percentage of people converting,
John: [00:16:43] right? Yeah. So, uh, over about 98% of our buyers buying within 12 months, but there’s a lot that goes into that. As far as the, again, the quality product, I mean the nice houses, nice areas that people coming in, the way we, the way we screen them.
So we’re setting them up [00:17:00] for success. Yeah. Yeah. So the only reason I don’t buy as if. Uh, you know, divorce, job transfer or something like that. Yeah. And, and, you know, let’s talk about where the market is right now and where it’s headed. Mike. Um, you know, you’re talking about entrepreneurs, uh, you know, that’s, that’s a, that’s a fancy word for saying, you know, you’re self employed, you know, 10 99 self employed.
So, uh, when you’re self employed, it’s much more difficult to get financing. And so I’ve helped a lot of people that own their own companies. And made a lot of money. It made very good money, but didn’t have know last year’s tax returns yet. Right. Uh, or they, they had so many deductions, you know, it, you know, to save on Texas.
Well, so excuse me. So imagine this, how many people in the last seven, eight, nine months now, especially eight months, seven months. Um, no longer have a job or a work from home and now more and more [00:18:00] companies are going to be, uh, first of all, more and more people are going to be self employed, right. More and more people are going to be contract labor.
Right. Uh, and so as you had more and more people that worked or jobs, and I was starting jobs. They’re not gonna be able to get financed on a house. They’re gonna need some other Avenue, some of their contract to buy, to buy a house and at least options of what great way to go. So the pool of people that, uh, are going to need lease options is about to grow dramatically.
Mike: [00:18:28] Yup. And there’s more and more people now with, uh, you know, like Uber drivers and also they’re really, they’re all, there’s a lot of people. Real estate agents. Yep. Real estate investors. A lot of people that are basically 10 99, and probably still have the ability to do well. Well, enough to get a traditional mortgage is just, they don’t qualify because they’re evaluated differently.
Right,
John: [00:18:49] right, right. Exactly. And so, so the market’s perfect timing for this. Uh, I’ve done this since Oh three. This is good. I think this market, what we’re about to see, uh, as far as the [00:19:00] opportunities going to be bigger, I think the 2008, I think it will be at least as big if not bigger, uh, than 2008. Um, because we’ve got the, you know, an Oh eight is the mortgage debacle and to 2020, it’s the virus debacle.
Yeah. Yeah, but
Mike: [00:19:18] why aren’t more wholesalers doing this?
John: [00:19:20] I was just about to say why aren’t more wholesalers doing this and how can they utilize lease options? Uh, I think it’s, uh, I think so many people when they start off in real estate, there’s so much information out there about wholesaling. You go to any Facebook group on real estate is about a lot of it’s wholesaling.
Uh, so many podcasts on real estate. Uh, there’s so much about, uh, wholesaling. So I mean, some of the big podcasts about wholesaling, nothing really about lease options. And so they get their foot in the door with real estate when we start with wholesaling and when they start, you know, they start making money and sort of building a business, if you will, [00:20:00] they just stay within that Lange.
And, um, and I’m all about the riches in the niches, but if you’ve already got these leads in this bucket that you paid for. You might as well utilize them. Right. And it all the time you’re talking about houses where the sellers are simply wanting full price or close to full price. Right. That’s where we bring in the lease option.
It’s actually far easier than negotiating a new and a wholesale deal. Uh, but you know, certainly if you’re a wholesaler, you’ve got to bring in lease options into your, into your tool belt. It’s not something extravagant and sexy and difficult to figure it out. It’s actually far easier than what you’re doing as a wholesaler.
Believe me. It really is.
Mike: [00:20:44] Yeah. The other interesting thing is, uh, you know, at the end of the day, if you’re, if you. I like to believe it was real estate investors. We’re problem solvers. We help people solve their kind of co usually complex real estate problems or make it easy for them. And if you have one more tool, even aside from the fact that you can [00:21:00] monetize it to kind of help the people that you’re already talking to, they already on some level, not everybody, but if you’re talking to them about a lease option at that point, they know like, and trust you to some level, right?
So the more tools you have to help somebody. Um, you know, you’re benefiting sellers too, because at the end of the day, what we’re trying to do is solve their problem.
John: [00:21:21] Yeah. Absolutely ended up. And so I always say, be the doctor. So I teach my students to be the doctor mean don’t chase the money, just be the doctor.
So you’re listening to the sellers ailments. What is their problem? What is their pain? Uh, and then when you, after you listen to their problem and their pain, you write the prescription. Now they may or may not take the prescription, whether you’re a wholesaler or doing lease options, that’s not your job to make them swallow the pill.
You’re just saying, here’s the prescription right now. They may or may not take it.
Mike: [00:21:54] They might get a second opinion.
John: [00:21:55] They may get a second opinion. Right. And, but at that, it’s that second [00:22:00] opinion. If they read prescription all that second opinion is just, Hey, I’ll give you 70 cents or 60 cents on the dollar.
Whereas you came in and said, Hey, I can do that. Or if you want full price, here’s how I can do it. Yeah, right. Give them a couple options. Well, they’re gonna, they’re gonna have more of a more likely they’re going to take your prescription. Sure,
Mike: [00:22:19] sure. And you there’s different types of lease options is what are their sandwich lease options where you kind of stay in the middle of it?
You kind of explained. Cause I think this is where. Some people have like tuned out, is it, there’s a, there’s some complicated ways to do it. There’s some simple ways to do it, but just kind of give a lot of the garden variety kind of high level lease options that are, that are out there.
John: [00:22:40] Yes. So there’s three types.
There’s a straight lease option, which is easiest one. There’s a sandwich lease option. And then there’s what I specialize in, which is the lease option assignment. So the straight lease option is really simple. It’s just between two people. There’s no middleman, nobody else involved. So let’s assume [00:23:00] I wanted to go.
Uh, I wanted to rent. I saw a house. That the owner had for rent assume you’ve got a house. I like it. It’s for rent. Uh, I don’t know. Well, the house we have, it’s one of the few that you bet you’ve done. Some repairs on that are gonna last more than a year. I’m like, boy, Mike, I think this house is actually going to last.
I like this house. I’d like to buy it and I’d just rent it. I’d like to do an option on it. So you and I work out the terms, you know, how much do you want, how much you want as an option fee, how much per month and watch the price now, instead of just renting it from you, I’ve got a lease option on that property numbers.
I’ve got the option to buy it at a set price within that year or whatever it is we work out is this great lease option, the sandwich lease option. Is where, uh, IZEA investors. Sure. Negotiate with the owner on the price, getting down the price, get them down. The monthly payment, locked it up with a contract where I’ve got an option to buy it at a set price and a set monthly payment.
I [00:24:00] then Mark it. That house is the lease option, but I Mark it as a higher price higher than three payment. I’m subletting the house. Yep. So the buyer’s paying me say 1600 a month, but my payment, the owner is 1200 a month. Right. Uh, and so, and then the buyer is paying a much higher price for that price. I’m sandwiched between the buyer and the,
Mike: [00:24:23] so you’re making a monthly spread.
John: [00:24:24] They’re making a monthly spread
Mike: [00:24:26] after you rent it, though. Right? So if all of a sudden that tenant doesn’t pay you, you’re probably still generally going to be obligated. You’re on the,
John: [00:24:32] exactly. It’s not a sandwich lease option has a little bit of inherent risk, right? So when I’m teaching people lease options always say, He was focused on the assignment first, because what I’m about to talk next is the easiest is a, is really easy for investors.
So the least option assignment, what I focus on is where, uh, I’m leasing the buy and the seller comes along and says, Hey, you know, I talked to the seller, we put the lease option together. They’re getting full [00:25:00] price. I put the contract there for full price and whatever that monthly payment is. They know I’m not going to be making the payments on the house.
They know I’m going to be assigned this contract over, I assume. And that contract over to the end buyer who is husband and wife, who talked about, they’d pay me my assignment fee of 10, 12, $14,000, whatever the case may be. And then move into the house. When I signed my contract, I dropped out of the deal.
And now the contracts between the seller, the buyer and the buyer just plays up the seller every month.
Mike: [00:25:29] And just like a traditional wholesale deal or an assignment. You have a contract. Uh, and you have equitable interest, so you don’t have to be an agent. You don’t have to worry about, you know, acting as a realtor without being one are licensed because you do have equitable interest in that.
John: [00:25:45] Well, it’s, I’m a principal in the agreement. And so I can actually, any of these houses, less, uh, that I have under contract, I could actually move into any of them. Sure if I wanted to. Um, uh, but yeah, so I’m assigning my contract, just like a host of our sensor contract.
Mike: [00:25:59] Yep. [00:26:00] Yeah. Yeah. And then in your instance, you have a process of where you’re constantly building a list of potential buyers, right?
That are. The right avatar for deals like this, right?
John: [00:26:13] Yes. We’re always building that list because that list is always changing for lease option. It’s not like a wholesale buyers list. That’s pretty static. Sure. Um, these lease option buyers, that that list is going to be changing, you know, all that.
Mike: [00:26:27] Yeah.
And you’re not, uh, these are not going on the MLS. So you’re hosting them probably on Craigslist, Facebook marketplace, like areas like that.
John: [00:26:35] We swap out some on a, excuse me, sometimes we’ll post them on Zillow. Uh, if we can Zillow Facebook, marketplace Craig’s list, um, other websites as well. Yeah. And one of the things we do that is, uh, still works magic is a sign in the yard.
Yeah. And that
Mike: [00:26:52] option fee the way that you get paid, you’re getting paid from the option fee effectively. Right?
John: [00:26:57] Right. That’s all we’re getting paid. Yep. When the assignment
[00:27:00] Mike: [00:27:00] that is in most instances, probably what the person was willing to pay a buyer and seller side real estate agent. Anyway, if plan a had worked right.John: [00:27:09] Yeah. So we get about 4%, four to maybe 5% of the year of the option price. Yeah.
Mike: [00:27:15] So it doesn’t like
John: [00:27:16] that’s
Mike: [00:27:17] aside from the fact that they might have to wait a year to get out of the deal. Um, that’s probably in many cases, uh, uh, a better deal for that person anywhere it’s not really anywhere.
John: [00:27:27] Right. Well, and so look, if you look, I told my students that, uh, the lowest hanging fruit is really for rent by owner.
If you don’t get for rent by owner, most of the time. Those anybody that’s for rent by owner falls into two categories. One is I’m an investor. Yeah. But the other one is accidental landlord. They’re only renting it cause it couldn’t sell. Right. So it’d be happy to do at least optional.
Mike: [00:27:53] Yup. Yup. Yup. So, uh, so John, if folks wanted to start to.
[00:28:00] Um, why don’t you tell us? Cause I know you have some programs and stuff. Like if folks wanted to learn how to get started in this, if they’re already doing deals and they’re like, how do I learn more and plug this in? Like what’s the best way for them to kind of get started?John: [00:28:10] Yeah. So, so the best thing to do, they can actually find me.
I’ve got a site there’s a lot of free information and training videos in this that, uh, is lease option classes.com. Lease option classes.com. And there they can find that they can reach out to me there. They can actually, I’ve got a number of different videos and stuff there that they can find me on YouTube as well.
I’ve got a YouTube channel. I’ve got a lot of free videos there on some of those videos on YouTube. You’ll see me working with my students, closing deals, getting artists mice. You’ll see me going through the process.
Mike: [00:28:47] That’s great. That’s great. So, um, uh, John you you’re, you’re a member of investor fuel, obviously on this show.
I only interview investor fuel members. And, uh, [00:29:00] could you just, would you mind just sharing just high level, what your experience has been so far? I know you’ve only been in the group for a little while now. You and I have known each other for a long time. I
John: [00:29:07] find
Mike: [00:29:08] of course, did your arm enough to get you in the group, but, uh, what, what, uh, what’s your, what’s your experience been with kind of the investor fuel family, if you will,
John: [00:29:15] you know, I gotta say, um, Yeah.
Since you were the leader of the group, I wasn’t expecting a whole lot, but I agreed the bar was low, but, uh, but no, in all seriousness, um, having gone to, uh, uh, the, the, uh, the meeting there in Fort worth, uh, that y’all had, and of course I’m really looking forward to the, uh, uh, uh, November one that we’re going to have, but, um, Yeah.
You know, the, the investor fuel mastermind is, is a really powerful, provides a lot of times tools, a lot of access to people that have the questions and have the answers to the questions that you are gonna have. Uh, and so, uh, heck I posted investor fuel the, uh, [00:30:00] last week about a question that I had.
Regarding very specific topic on a, on a specific type of list, uh, and was getting a lot of input on that as well. But w seeing the, um, uh, the region, you all have to your vessel fuel members with a continuous. A training continuous information, as far as, uh, we’ve got this going on, Hey guys, we’ve got this speaker this week, come join us for happy hour.
And you are doing, providing all this content for your, uh, for your investors and for your members. A lot of really valuable content of valuable information. When I sat there in the, in the meeting on incept, in, uh, in Fort worth, I’m sorry. And Fort worth. Uh, well, you’re talking about a room full of, uh, uh, people that are doing a lot of deals.
But it’s not a, it’s not a, it’s not a peacock show. It’s not a thump your chest. Look at me how many deals I’m doing. It was people in that room. They’re saying, yeah, I’m doing these deals. I’m doing this many deals a month, whatever. Here’s my lead generation. The [00:31:00] guys I got to tell you, here’s where I’m having a very difficult time.
Right? And then anybody else could, could chime in and say, Hey, I’ve done that. I’ve been there. I’ve been on that path. Here’s what helped me. So it’s definitely valuable if you’re, if you’re serious about real estate and taking a look at your business, the next level you got to get into a mastermind and invest your fuel is definitely one of the top ones I could recommend.
Mike: [00:31:20] Awesome appreciate that, John.
John: [00:31:22] And I will say this for anybody that joins investor fuel. Uh, if you see me at a live event, let me know. You’re a member of investor fuel. I’ll give you a free autograph
Mike: [00:31:31] that that is worth whatever the price of admission.
John: [00:31:34] Yes.
Mike: [00:31:37] Cool buddy. Well, excited to have you in the group.
Thanks for sharing some good information today. I think for a lot of folks that are watching this, if you’re, this is, this is, this is the time to be putting these extra tools in your toolbox, because like you said, marketing costs, acquisition costs are up. There’s going to be sellers that in some instances want to sell, but they bought in the last year a couple of years and they just don’t have a ton of equity necessarily.
So they can’t sell it at a deep discount or they don’t want to. [00:32:00] Right. And so. There’s always we’ve, you know, historically most houses that
John: [00:32:03] I buy are
Mike: [00:32:05] terrible shape. Like they, that’s kind of how we get them so cheap as they’re like, they were in really bad shape. Then there’s always the seller that the house isn’t really in bad shape, it’s totally livable.
Right. They just, they just want more than what the market will bear. And maybe it’s, it’s very livable, but it has ugly wallpaper and it just has some things that don’t make it. You know, uh, an ugly house, if you will, but it makes it like, Hey, you’re going to have to do something a little extra. And that little extra thing is let’s sell this to somebody that has imperfect creditors in a situation that’s not traditional.
John: [00:32:37] Right. You know, I, I’ve got, uh, they’re not in front of me. I’ve got all these, uh, contracts. I can show you these deals that we’re working, that these are beautiful houses here. Uh, two of them that we’re working on are in Dallas. These are million dollar brand new construction. Wow. Brand new construction.
Right. Uh, and I’ll tell you what, um, that million dollar pressure
Mike: [00:32:58] builders that just basically [00:33:00] say, because they’re higher end houses, the market has softened at those price points, right? So they’re like, how do I get out of this? And one way is effectively to give somebody the option to buy, um, versus you must buy.
Right?
John: [00:33:13] Exactly. Exactly. And they’re going to be saving the builder’s going to save $60,000 on commissions. By using us per house. Yeah. That’s huge, you know, so, yes. So, um, um, so again, these are pretty nice houses. I don’t always do million dollar homes, but, uh, the point is these are everything else we have is nice movement.
Ready?
Mike: [00:33:35] Beautiful home. Yup. Yup. Awesome. Good stuff, John. Well, thanks for sharing today.
John: [00:33:40] Okay. Thank you so much, Mike.
Mike: [00:33:41] Appreciate you buddy. And we’ll see, we’ll see you soon. Uh, everybody. Hey, thanks for joining us. They hopefully got some good value out of this. I think this is a tool you should have in your tool belt.
If you’re not doing it now, John has been really educating, uh, the industry for a long, long time. He’s been around for a long time. He’s super old. Uh, but he, uh, no, he, he he’s very, let’s say that, but [00:34:00] really good information. We’re going to put a link down below for its lease.
John: [00:34:02] Option classes.com.
Mike: [00:34:04] So we’ll provide the link down below in the show notes.
If you want to go check that out and, uh, appreciate you joining us on the show. Hopefully we’re getting some value. Hey, if you haven’t yet subscribed to the investor fuel show, we’d love it. If you subscribe wherever you’re watching the day, iTunes, Stitcher, Google play, even on YouTube. Of course you can find all of our [email protected].
And if you’re looking for a mastermind family, investor fuel really is world class, just an amazing group of people that are big givers and a, a lot of folks who’ve joined our group and double, triple, quadruple their business profit guys are happier than ever. And it really found a, a group of people that I can call friends and, and count on when they need it.
So go check out at
John: [00:34:40] dot com at that,
Mike: [00:34:41] that strikes a chord in you. We’d love to talk to you and tell a bit more about it until the next show. Have a good week. We’ll
John: [00:34:46] see. Yeah.
Are you
Mike: [00:34:52] an active real estate investor? If so, no. And you want to latch onto the power of surrounding yourself? There’s over a hundred of the nation’s [00:35:00] leading real estate investors. All committed to building stronger businesses and living richer
John: [00:35:06] fuller lives.
Mike: [00:35:07] You should jump on a call with us to learn more about investor fuel, simply visit investor fuel.
Dot com to get started.
