Invest In Real Estate With No Money: What Is A Lease Option
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Invest In Real Estate With No Money: What Is A Lease Option

Mark this video, you have asked and I’m
finally going to do it, I’m going to break out as much information as I can for you on
YouTube on how to successfully transact lease options. If you’re looking for how
to do real estate with no money and no credit and you want to do a deal in the
next 90 days regardless of your age or financial situation, friends, that’s what
you’re going to find. Now I need to ask a favor of you
because I can’t fit it all into ten minutes but what I can do is break it
out in the next four videos and I’m bringing my business partner, Steven
Miller onboard and the two of us are going to tag team and we’re going to rock
out your lease option world in these next four videos to show you everything
from A to Z on how you actually successfully do real estate deals so in
the next 90 days, you can take a check to the bank. Alright, if I get one more comment
where you guys are like, “What is a lease option?” I’m like, that’s it, we’re going to
create a four part video series and we’re just going to give it all to you
and we’re going to lay it down because if anyone else has one more
question that I’m like, “Kris you keep leaving this out, what do you mean by
this?” I’m like, alright we’re going to create the definitive right now and it’s going to
start in this first video talking about what is a lease option, what are the
numbers, and it almost makes me feel like rapping even though I’m white and I
can’t. Kick up a beat. Lease options, so cool, get in, learn the stuff, it’s amazing. – We will never do that again, that is never happening again. Alright, so redeeming qualities however is
that we can teach you this.. – Kris, so we’re talking about lease options and
before we get into the how-tos and the marketing of it and the contracts and
whatever, can we get into why they would want to do a lease option, like how does
how does a lease option differ from maybe your typical rental. – Okay so, let’s
get it, most basic concept and real estate is buy a house, rent it and make
money and you know that’s a real deal, you can buy a house, you can rent it, you
can get a cash flow, if you hold that house long enough, you’ll eventually sell
it for an amazing profit, you’re going to get cash flow because the market is
always what? Going up. It might be going down and up, down and up but over time, it
is always inflating and it’s always going up so in time, you’re going to get a
great return. We’re simply going to share with you an alternative today like
Steven is saying of how you make a lot more money and today, we’re talking about
the 40K swing.In other words, lease options at a minimum, on average, give you
$40,000 more than a straight rental. So a lease option is best said in one of two
ways, you might be familiar with rent to own.. – Well that totally makes sense. – I
rent it until I can own it and on a more sophisticated level, it’s
called a lease which is a rental agreement with an option to purchase
which means, oh you mean I could get in this hole so I can rent it and then I
could have the option in time to buy it? That’s what a lease option is. Now these
four videos are designed to go through everything from what is it and why are
we doing it to how do you buy one and market it to how do you sell it and what
are the contracts all the way to how you manage it and even
purchase homes on these option with as little as no money, no credit so we’re
actually saying that regardless of your age and financial situation statue,
credit position, anyone can go out and do real estate right now. I challenge you in
the next 90 days with what we teach, you can take this information and go out. So
commit to watching all four videos and I want you to pull up pen and paper, I know
you don’t normally do this but imagine that class is in session and we’re going
to give you everything you need A to Z right now on understanding what a lease
option is and our invitation is, go out make some money and comment below and, oh
my gosh, I did it, it was so amazing, we want to see that from you. – So Kris, what
I want you to do right now because Kris, I’ll tell you right now.. Those of you
that don’t know, you may not talk about this often, Kris is a numbers
nerd. – Wait. I’m a rapper. – Kris, no. He’s not a rapper, he’s a numbers nerd, he
retires to his nerdery to crunch numbers like literally, you can see this guy
going crazy, it’s like, I’ll stop there.. Anyway, the point is what he can be right
now and what I want you to do, Kris, is that when you take a home and let’s
just call it a, let’s take round numbers, a $200,000 home, okay. So let’s say
you’re going to take a $200,000 home, what I want you to do right now with the
numbers is help them see how investing this two hundred thousand dollar home,
and let’s say you got it with a 15% equity position, can do that real quick?
– So I got the home for one hundred and seventy thousand dollars, it’s worth two hundred thousand, worth two hundred and it’s like, how do I make
maximum money on this? – So what I want you to do is, I want you to be exactly separated,
I want you go through a rental property if you were just to rent it and then I
want you to talk about lease option with our system, what that would look like.-
Alright, how’s that? – And this is what we’re teaching you right now, this is exactly
where to teach you. – So this video is what is the lease option and why the heck
would I ever do it and then in video number two, we’re going to talk about how
you actually execute a lease option. So let’s do this example. I’ve got a
home and let’s just say that you had a house with thirty thousand dollars of
equity, this represents a 15% position and so the first thing I’m going to do is,
I’m going to go into my market place and I’m going to rent this home and when I go
to rent it, I’m going to assume that I have a payment on this house where I’m
going to rent it for $1,200 but my mortgage with all of my payments and everything
is $1,000. – Now we’re just using some round numbers
right now, these may not be exactly accurate although I will tell you, he’s
got a pretty good mind for this. – And this is showing a $200 cash flow, if
every month I collect $1,200 and every month I pay a $1,000, then every month
I’m making $200, that’s what gets people into real estate in the first place
because that’s your residual income. So I’m going to have some profit here and in
this scenario, let’s assume for a moment that we’re going to hold this home for four
years. Okay so what could happen in a four year scenario? Well first of all, if
I am collecting that money, I’m making $200 a month and most people rent
houses for a year at a time, let’s assume that I get a couple of repeats but I’ve
got some vacancies, let’s assume that I have one month out of the year vacant
and let’s assume that over the next four years so what that means is, I want to
totally calculate here if you can pull out the calculator , Steven. Let’s
actually break this down also and here’s what I want you to do, the first thing
that we need to understand is that there’s going to be a cost of holding
this home okay and so what we’re going to do is, we’re going to have a $200 cash flow
for 11 months – Okay so 200 times 11, that’s
2,200. – And we’re going to hold this for four years okay and that takes a vacancy in a
new account so multiply that by four – Okay, so that, 2200 times 4, that’s
8,800. – Okay so on my cash flow right here, we’ve got 8.8. – Whoops not exactly,
yes. – 8,800 alright. I ran out of room we use K’s, so that’s
$8,800. However, I have some extra expenses that
come up along the way on this property, remember I have to cover the
$1,000 for one month out of each of the four years so that’s $4,000 that I have and let’s also assume that on my expenses, I’ve got
$4,000 in vacancy, let’s also assume that in repairs,
let’s say, I’m dealing with $1,000 a year so it’s $4,000 in
repairs and let’s also say that I don’t want to be a landlord so I have a
property manager that costs me $100 a month so $100 times 12 months is $1,200
times 4 is $12,000 times 4 is $48,000. – $48,000 dollars in property management so I take $4,000, $4,000
and $4,800, that’s total expenses of – yeah that’s $12,800 – okay so look look out the gate here, I’ve got
$8,800 that is, that looks like it’s working out
well for me but it’s cancelled out with the $12,800 which means I am down for grant. I held the home for four years and I’ve
already shelled out $4,000 more out of my pocket for holding this
however, let’s just say in the next four years that the market actually goes up
and my home is valued at two hundred and ten thousand dollars, okay, what’s
6% of $210,000 cause now I need to do my realtor
fees. – so that’s $12,600 and let’s
throw a couple thousand for some sellers concessions, let’s call it, let’s round it
up, I got $15,000 in those fees for realtor and closing costs and now it’s
time to figure out how much money did I really make on this. Well we owe 170 and
that they’re using 170, 210 is $40,000 so if I have $40,000, now we need to
subtract from that, the net difference here of $4,000, subtract the $15,000
realtor fees and then don’t forget that you’ve got to put, you got to
get it in four years up to market speed, let’s also assume that you’ve got $10,000 in repairs. – That equals $11,000. – Okay,
by the way, I added a 1 here so $14,000 repairs. So how much is it?
– That’s $11,000. – Okay so in this scenario, I wish had a different color here, we’re
going to say that I made $11,000 game. Now just check that out for just a
moment, I bought a house, I owned it for 4 years, I did get tax advantage and at the
end of the day, I made $11,000 and depending on what my down payment is, I
could calculate what my ROI is. Right now we’re just going to look at this big gross
number and now we’re going to do the fun magic of what happens with a
lease option. When I’m actually doing, Steven, if I stand on this side, I can’t
write like this. Switch. Alright,
so let’s do the same thing. Now instead of renting it for $1,200, it’s a lease
option so what I’m actually doing is, I’m actually going to be renting it for
$1,400 a month. So I’m going to say rent is $1,400 – There’s a reason why we’re able to
rent it for a little bit more, we’re actually helping people build equity in
the property – There’s people out there that want to get a house and the banks
have shut them down saying, your credits not good enough, your job’s not good
enough, there’s so many people, there’s a massive margin for people that want a
house, can pay for a house and the banks say no. So we’re gonna charge more and on
top of that, I’m also collecting a non-refundable downpayment and the down
payment on this, we’re just going to say it’s one of the more typical homes, let’s
call it $5,000 so I’m making my extra 5 G’s right up front on that but I’ve held
it for four years and sometimes the family that’s in the home doesn’t buy it
because they needed the flexibility to get out, half the time that happens, half
the time it doesn’t so we’re going to stay here with our average numbers that it
happens twice so over that four years, we’re actually going to collect that
$5,000 twice, it’s $10,000 that we’ve gained up front on
that. We now have calculated a higher rent, we still have the same mortgage of
$1,000 but our cash flow is way more juicy. Now, let’s start looking at the
expenses on this. First of all, we have the same thing on two vacancies so we’re
going to say that that our vacancies come to – so instead of four vacancies
which is what this was, oneper year right ? Instead, we have only two
vacancies. -S o on vacancies – so let’s call it $2,000 – it’s a $2,000 expense.
Okay, next on repairs, we don’t have any. – There’s no repairs. – Why Steven? – Well
because in the contracts, we make sure that the tenants are actually taking
care of all repairs. I understand, this is their home now, the way that we set it up,
the whole conversation is about them buying this property so they’re
invested in it, they want to fix it up and they do so there’s no repairs that
are coming out of your or my pocket. – Okay what about property management? –
Oh there’s also little to no property management – because remember, they’re self
managing it, you don’t have to pay someone a $100 a month to do
all that, the check comes straight to you, it’s self-managed. What about realtor
fees?- Oh there’s no realtor fees, you’ve got your buyer already built in. Guys,
this is amazing, no more 6%, no more losing $15,000 in
expenses at the end of the sale, it’s all already built in. – So what you’re saying
is, let’s calculate now our total cash flow. $400. Now we are going to
calculate two months of vacancy so I want you to go with first of all, 22
months, no, excuse me, 44 months. 44 months at a $400 cash flow, so
400 times 44 months equals seventeen thousand six hundred. We collected our
$10,000 and down payments Okay now we do have $2,000 So we have our 10 and our 17 and
so now what we’re going to do with all these numbers are, we’re going to start
where we did before on this side. We have $40,000 gain from in four years selling
it for 210 but we’re into it 170, we’re going to take that 40,000 and add
10 grand. – I’ve already done it now.
– Add the rent, subtract that, what’s the total number? – $25,600 plus now the $40,000 – For a total of what? – That’s a total of
$65,600. – Okay now just pause for a second. $11,000,
$65k. Steven, what’s sixty five thousand six hundred divided by eleven
thousand? Sixty-five thousand six hundred – okay sixty-five thousand six
hundred – divided by eleven thousand – divided by eleven thousand. That’s 5.96. – In other words, that is a 5.96 times higher term. That
is a six fold higher return. We call it a $40,000 dollar gap in this
situation. The gap is actually fifty five thousand not forty in this particular
example. So I just want to ask, how many of you watching this video are thinking,
wow I don’t want to hire a property manager. Me. How many of you are thinking,
I want to actually push off all repairs and I don’t want those expenses? Me. How
many of you thinking, I’d love to get paid up front when I step into the house?
Me. How many of you want double the cash flow? Me. How do you want to avoid realtor
fees? Me. Why wouldn’t you ever do a lease option? – It just makes sense. – It just makes
sense. Now understand where we’re about to head is, we’re going to assume that you
have a house and what we’re going to do is, we’re going to talk about what you can do
to make maximum money on this house and in this next video, we’re going to get into
how you market it, how you show it, how you do it and by the time we get to the
fourth and final video, we’ll even show you how to buy a house on these option
so you don’t even have to potentially have money out-of-pocket, you don’t have
to use any credit so if you watch this four-part series, we’re going to show you
how you can transact all of your real estate in this amazing microcosm and do
what I did, age 26 retired with the net worth of 1.6
million dollars that I kept on growing greater and greater and greater and
friends, this is the foundation I built all of my wealth on, claiming that it is
the single best strategy in real estate. Can you see how this is least time, least
effort, least risk, more profitable. This works in every market, buying single
family below the median. Friends, this is the rock star way to go if you’re just
starting out and you’re like, how do I play? Keep watching. Oh man, we’re just
warming up. Are you like so excited for the next video and it’s like, okay Kris,
now I understand why you love lease options. I now understand
why I love lease options. Now how do I take it to the market? How do I take a
house and start actually doing a lease option? Join us in the next video, I’m
going to show you exactly how to do it.

About Gregory Ralls

Read All Posts By Gregory Ralls

100 thoughts on “Invest In Real Estate With No Money: What Is A Lease Option

  1. Math seems a little stalled and a tiny bit off but it sets the base for comprehension to better guide and educate yourself. nice

  2. On the lease option shouldn’t have been 46 instead of 44 months. 4 years/48 months. 2 months vacancy. 46 months?

  3. A lot of projecting here on expenses…. Giving rent the terrible scenario while giving L.O. the best possible scenario.

  4. If i buy and lease where im going to live??🤔 So I'm assuming you have to have one apt already on the side

  5. you're assuming they wont destroy the house and leave, if they did that you better hope is not more than the 5K deposit or your now in the hole and need to get the house repaired for a new tenant.

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  8. When you put the property in lease option, do you build equity into the property for the buyer or for yourself? I'm little bit confused on this but mostly get the concept

  9. How are your monthly expenses (cap exp) and Principle interest and insurance(PITI) going to be 1200.00 on a 170K house? They left out the marketing expenses and the possibility it sits empty for a while. You have to have a funnel set up of people wanting to rent to own.

  10. How would you have vacancy every 2yrs on a LO? that mean ppl would be walking away from their down payment…

  11. 1.6 million dollars net worth is nothing for fucksake in Dublin if you wanna buy a nice house it’s like €3 million, I’m wasting my time watching these peasants

  12. My home is 15k under water because of the 2008 housing crash. I want to move but can't afford 2 mortgages. Can I do a lease option on my current home?

  13. Hey I've been watching your awesome material but I have a question… You said let's say it's a renters market. How do you know if it's a renters market or buyers or seller's market as they say?

  14. Why didn't you use a lower loan amount? If you pay 1k a month that's 48k towards the loan that you didn't discount

  15. Don't you guys in the US have such a thing as a transfer cost? Buying a Usd 150k house will translate to a 10k tfc. Higher thr cost of the house..higher the tfc.

  16. at 8:20 you calculated vacancy as an expense towards the cashflow, however the cashflow number you calculated, already took vacancy into consideration…

  17. Mhhm little vague, I feel that the video should a little longer and there should be more about the why instead of what. It feels like this is too 'amazing' and maybe 'fake' because for me the video went too fast paced and the numbers weren't clear.

    Also if you do a leace option why is there any vacancy at all with the nonrefundable payment

    And why is this about the home-owner istead of the buyer, I thought I was going to do a leace-option and buy it later with profit.

    Now you guys propably didn't mean to give that impression and I am coming from a lower place, but it didnand feel scammy.

  18. How many of these needy families actually consumated the purchase? Or percentage. Also, how do you arrive at the fair market value of house up front?

  19. I love your videos keep it up man. I appreciate the knowledge you’re sharing and I too wish to one day grow as big as you.

  20. I really liked this video but my question for you is where are you going to live in the main time. I guess you making an assumption you already have a house for yourself

  21. Hey Kris suppose there’s a home worth $200,000 I purchase it for $180,000. That leaves me with $20k in equity. I have a mortgage of $800/mo and I decided to sell after 2 years thru lease option. I came up with numbers on my own but, how do I know how much to ask the new tenants for a Downpayment and how much should I charge them for monthly rent ? Do I pick the numbers myself according to what I think is fair or is there a more professional way to go about it ? Please help. Thanks

  22. Uh his math was way off. It wasn’t 11k in gains. It was 2200 in gains. At least that’s my math in my head. You can check me.

  23. Lease to own has a buyer making payments/1 Time payment of house ———renting has someone covering your bills towards owning the house lowering potentially loss income / final sale price – what is owed still = profit

  24. Hey Kris, probably u won't read this but I just bought your book because I'm only 15 and I really wanted to invest in real estate, thank you so much for the knowledge

  25. He teaches you how to make a bad deal kinda work but you shouldn't buy that deal to begin with. There I just saved you 16 min

  26. Theres some super shady math in this video, where did you get 2k in vacancy losses in the L.O.? Also, someone this 'knowledgeable' in real estate should understand that if you treat rent as pure profit, you can't treat vacancy as a direct loss but more as a potential profit loss… Lease options seem as a risky thing to attempt because anyone with common sense who got declined for a mortgage will just see you as a shady businessman and most likely shy away from it.

  27. Kris Krohn I really like to join real estate but dont know how,think you could be my mentor,just a college drop out without employement,love your videos really motivate me

  28. He deducted vacancy 2x, first he multiply by 11 month then he deduct another $4000 equivalent to 1 month each year. It does not make any sense to me !!!!!

  29. I'm white and can't rap either! Yep totally CAN'T rap. But if you could I think you'd make a great rapper bro. 😎

  30. What is the best state to live in for real estate investment. I live in Northern California and I’m not sure if I should stay here

  31. “The wife’s gonna cost you the other 250 anyways”😂🤣😂😂
    im 15 and unfortunatly my age matters but i am taking notes
    "He's a total math nerd"

    Can't do 3rd grade math.

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