I’m working on a lease option deal with one of my partners right now. In this brief post I’m going to share with you how I plan to eliminate a lot of risk from it.

First off, the property is a townhouse. The seller called off a bandit sign and is extremely motivated. This is the type of seller us real estate investors dream about. In short, he moved overseas 6 months ago and the property has been vacant ever since.

The numbers work, but I have not seen the inside of it yet (probably meeting the seller over the weekend) which of course makes me nervous since who knows what could have happened while it’s been sitting vacant.

Also, the seller doesn’t want any money out of the deal which is always nice. Even though, I never, ever give the seller money on a lease option deal. If I’m giving them money, then I’m doing a sub-2 deal so I can own the house.

So how am I going to make this deal almost risk free?

Well, when it comes to lease options a lot of times an investor will have to make payments to the seller while they find a tenant. And they’re losing money until they get it filled. Or else, they say they will start making payments in 30 days to the owner, but again, if the property is not filled in 30 days you have to start making payments and you lose money.

My partner and I are going to tell the seller we will start making payments when we get the property filled. It if gets filled in 30 days then he gets his money then, if it takes 90 days, that’s when he will get his money.

This takes a lot of pressure off of us and we don’t have to worry about paying rent on a vacant house. In fact, not too long ago I did the same thing on a lease option deal in Clifton, VA and it worked out great.

Now, this usually only works with really motivated sellers, for obvious reasons.

But it still doesn’t hurt to tell a seller you’re going to do it this way. All they can tell you is ‘no’ and then you look like a good guy by saying, “Ok, then we’ll guarantee your payments 60 days from now.”

Hopefully by this weekend this deal will close… the house will be decent inside… and me and my partner won’t have to make a payment until we get a tenant/buyer in the property.

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