What Is Wholesaling Lease Options?

You're familiar with "wholesaling" real estate, right?

It's your basic quick-flip, where you find a really great property deal, match it up with an investor-buyer, and mark it up a little and then flip it to them for a quick coin or two. Usually done via assigning your contract or double closing.

And then there's lease options, where essentially you lease a property, while also having the option to purchase it at a set, specific price at some point in the future. A little more creative strategy that's usually more of a "cashflow" approach.

And now, there's wholesaling lease options...

Wait, What??

That's right, wholesaling lease options.

It may sound like a confusing misnomer, but it's actually a very real and profitable strategy for doing deals that takes a page from each approach and combines them into what many feel is the best of both worlds.

To help you understand how it works, we turn you to our own master on Wholesaling Lease Options, Mr. Joe McCall.

Joe's story of getting into real estate investing is not the overnight success. In fact, Joe did a lot of things wrong. For a long time. he tried and struggled with many different investing angles and models... Until one day, he stumbled upon Wholesaling Lease Options.

Things changed quickly from there. And as a result, Joe found himself in a position so many new investors dream of: His part-time income from wholesaling lease options surpassed his full-time J.O.B. income very quickly.

His $75,000 / year job was actually starting to cost him money. So as you might imagine, he kissed his “real” full-time J.O.B. goodbye within a matter of months and hasn't looked back since. All thanks for his quiet little discovery of wholesaling lease options.

Today Joe easily flips 2-4 lease options a month, part-time, at a profit of around $3,000 - $6,000 a pop. And he's successfully outsourced almost the entire thing (you have caught his recent lessons on REI outsroucing, haven't you?)

So I guess you could say Joe wrote the book on this topic (figuratively and literally :-)

From Joe McCall, Wholesaling Lease Options Advisor...

What is “Wholesaling Lease Options”??

Let me first tell you a little bit about my background. A few years ago, I was buying a lot of homes with traditional bank financing. When the banks started telling me that I couldn't buy any more homes, I started buying homes “subject-to” the existing mortgage. Pretty soon, I owned about 12 homes within 12 months. (And I was selling all these homes on Lease Options.)

Yes, I owned 12 homes. I thought I was a successful real estate investor! But…

I was equity rich and cash poor…can you relate??

I had lots of equity? OK, actually I thought I had lots of equity… but then the market crashed! Can anyone relate?

But when you are only making $100 – $200 per month cash flow on each house, that money quickly disappears in vacancies and repairs. All of the sudden, I found myself with a serious cash flow problem. I realized I needed to fix my cash flow problem, and fix it quick. So I started wholesaling houses.

So next I found myself spending thousands and thousands of dollars on marketing – direct mail, Google Adwords, websites, signs, etc. And I was getting a lot of leads, and actually starting to make some good money!

But before too long I started getting very frustrated because I was spending so much money on marketing and throwing away so many leads from sellers who were not motivated!

Maybe they didn't have enough equity. Or maybe they did have enough equity, but they weren't willing to share any of it with me! A lot of my leads weren't behind on payments. As a textbook wholesaler there was nothing I could do to help them, and I was getting really frustrated!

So there I was. I loved buying properties and I was really good at selling them on lease options. But that approach left me with a serious cash flow problem. And while I loved the cash flow that traditional wholesaling was giving me, I was frustrated with the amount of time and money I was putting in marketing for wholesale deals with relatively little to show for it.

That’s when it hit me: “Why not wholesale lease options”?!

Let’s look at some facts…

1) There are TONS of sellers out there who can’t sell their home. They either have very little equity or they aren't willing to discount their home to 70% of ARV to compete with the banks.

2) There are TONS of buyers out there who can’t buy a house.

So I thought to myself, why not stop throwing away all those leads and do something with them? Why can’t I put “Lease Options” and “Wholesaling” together and make the same money with them as I was making with regular wholesaling?!