Hi, it’s Lou Brown. I’m back with another of my 101 cash flow accelerators and now we’re going to talk about lease with the option to buy, get a better resident, and increase your cash flow. Now, how in the world can you increase your cash flow? Well, number one, when they move in, they’re going to pay you a non-refundable option consideration. In our world that is generally no less than 3.7% of the value of the property all the way up to 10%. When we get to the 10% level, then we’re going to go to a different program called owner financing. I’ll teach that to you in a different segment, but what’s valuable here is instead of a traditional landlord-tenant relationship, typically landlord only gets a security deposit, which they can’t spend and they get their first month’s rent. Well, in our world, we’re not only getting the first month’s rent from the resident, we’re also getting a purchase from them.
They’re purchasing the option to purchase the property. That’s a significant cash flow accelerator because it’s a hunk of money. Think about a $100,000 property. Now instead of getting, say a $1,000 security deposit that you can’t spend, you’re getting $3,700 $5,000 $7,000 that you can spend. Why? Because they’re purchasing the option to buy that property. Now I give them up to three years to purchase that property so their money is well spent because I’m going to give them one year of that option at a fixed amount and then it’s going to increase typically a half percent per calendar month until they exercise their option to buy. So it’s a really great cash flow incentive. Cash flow accelerator, you got a better resident, different mindset. It’s always valuable to have somebody that’s got some skin in the game baby. And also if they were to move out in the middle of the night, if they were leaving any damages. Remember you got a significant sum of money at the beginning that helps you over that hump.
Well, I hope this has been valuable to you. To learn more about leasing with the option to buy, go to my system StreetSmartInvestor.com click on tools, click on lease options, volume nine and all the paperwork to do this with, along with the audio CDs, six different audio CDs that walk you through the entire process. Very very valuable, is brought us a fortune in our business. Well worth it, and it is a great cashflow accelerator. If you like this, if you love this, share this and definitely subscribe. I’ll see you soon. Yeah, baby!
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