Real Estate Open House – What Is a Lease Option – Part 3
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Real Estate Open House – What Is a Lease Option – Part 3


We’re so close.. Today’s the day, this is
the video where we break it down for you and show you exactly how you put the
person in the house and take a check to the bank. Okay this is video number three
in our series on how to do a lease option. In the last videos, we first
started out by talking about why a lease option makes so much more sense than
just doing a straight rental. In our last video, we talked about how you market to
actually find people for the house and in this video, we’re going to talk about how
you do an open house and the conversation that you have and how you
basically seal the deal on a contract to get a contract for keys and a three five
seven or $10,000 down payment. Steven, walk us through the open house.
– The open house is so much fun. Now you’re not just going to be meeting there with one person,
you’ve probably heard us do our little roleplay on how you talk on the
phone and sending someone to a time where you’re going to be there. I will tell
you right now, the open house, your goal is to get as many people to this
open house as possible. Now you’re not talking about it as an open
house over the phone with people, you’re not telling people, “Hey, come to my open
house.” No, you’re only going to tell them, “Hey, I’ll meet you at the property.” “Hey, I’m
going to meet you at the property.” Hey, I might have someone else there too but I
want to meet you at the property at 7 p.m.” Because you want people there. Kris,
why do we want as many people as possible there? – Well because there’s only
one house but there’s multiple families that want it. So what that does
is that really tells them that if you’re serious, you better get your game on.
The less serious people are going to walk away, the more serious people are going to
rise cream to the top and the first step of doing an open house is to go ahead
and be friendly and meet people. Now I’m not going to shoot a video on how to
smile and shake hands but for heaven’s sakes, be an approachable human being,
show up gregarious, be friendly, be the first to shake your hand and when you
get there, you’re going to be friendly and you’re going to tell them step two is to go
check out the house which means, Steven, before we get into contracts and numbers,
why do you want them actually walking through the house? I want them imagining,
now you’ve all probably done this before, if you’ve ever bought a home or ever got
into a new place or even bought a new product, you’re looking at it, you’re
turning it around and you’re right, you’re imagining why, what you
do with it. Well same thing with the house, you want them going through the
rooms and imagining themselves in the rooms, you want them to have their kids
there and say, you want the kids to be out doing the rooms and saying, “Hey, daddy
this is this is my new room.” Right? You want them to imagine themselves in it
and see themselves doing what they would normally do as a family right there in
your home. – And you also want them to be really considering, is this home for us.
So you don’t want to talk contract, you don’t want to talk shop, you want to
just find out, is this the home? Could this be the one that is going to help your
family get the opportunity that you need next in life? And so take the time. If you
got five families, you might want to take the most interest in ones and walk
around with them and spend a few minutes and then you know get some touches with
a few other people, you might only have one family there, spend time with them,
walk through, create a little bit of space but help them understand where
things are, kind of talked about the benefits of the house and so you just
want to do a real basic walkthrough so that we can then get to the conversation
of, let’s talk a little bit of shop. Steven, what happens when they walk
through the house? That’s the third step here is, now you know me, now you know
the home, now let’s talk about the program and one of the things that I
love is we do this flyer and this is something that you can create at
home as well, you just put a flyer with some basic information, some of that
information is going to communicate that you’re open-minded and you’re flexible.
Right, we talked about those already, some of the previous videos, and you going to
communicate some of the aspects of the program that you’re going to be doing, right?
What is the lease option? How are you helping them? Well some of the verbage
that we often use is, we help people build thousands of dollars of equity in
a very short amount of time or hey we help people to stop throwing them away
their money and rent it actually put it into a red tone so that they could build
equity for themselves. – And then the last thing that the flyer is going to do is, it’s
going to communicate a really important series of numbers and what we’re going to
do here is, we might show on these numbers, this is what a $3,000 down
payment looks like, this is what a $5,000 down payment looks like, this is what a
$7,000 or $10,000 down payment looks like and next it’s going to show them what
the payment is. Now if rent on a house is $1,100 in that area, then on a $10,000
down payment, I might show $1,200. I’m a little above market rent because they’ve
given more down, it might be $1,300 if they’re only putting five grand down and
it might be $1,4000 or even $1,500 if they put $3,000 down
so we let them know here’s our flexibility, we got options, what you put
down will determine what your monthly payment is and also what you put down is
also going to determine the next column which is, how much equity can you build?
Meaning, when you actually get into this home, every time you make a house
payment, we’re going to actually credit something towards the future purchase
price, this is really where you’re doing what banks do but you’re even doing it
more aggressive, you know, a bank will give you a 30-year loan and they’re
going to amortize it where all of its going to interest and you have to hold on to
that home for fifteen years before you start actually having something go to
principle. Here we’re going to say, wow, if you do the $10,000 option, we’re actually
going to give you $200 a month that you pay on time towards the purchase, on this
option it might be a hundred dollars and if you do the lowest option, it might be
$25 dollars or it might be something really small and then the last
thing that we’re going to be talking about here is, I got my down payments, I
have the section here on what’s my, what are my payment options, how much am I
actually going to be crediting back and Steven, what else do we need to
communicate? – So over here, usually on a two-year
period, we’ll just calculate it and we’re not going to do this right now but
we’ll take the $3,000 times or plus the $25
over two years, right? Because typically, we’re signing a two-year contract with
these individuals and we’ll just put the totals in this column here so they can
see if I go into this deal and if I come into this home, I’m going to
earn X amount of thousands of dollars of equity in this product. I’m not just
throwing my cash away, I’m actually earning money. – So for example, a hundred
dollars on two years is $24,000 plus the $5,000,
that’s gonna show.. and here if I put $10,000 now but I
get $200, then I’m going to be getting $48,000 with that,
that’s $14,800 and when they go to buy the house, if
they did this for two years, there’s $14,800,
it’s going to be credited to them from whatever the purchase price is. Now
Steven, I just want to talk for a moment about something important that people
are wondering which is, what am I really signing the house for in the future?
Like what if they want to buy it in a year, what if it two years, what if that
two years they need to extend for another year? What will actually
determine the purchase price? – Kris, this is the most beautiful part of the lease
option system that we’ve put together because this is something that I’ve
never seen anywhere else and you know, there are a lot of lease option
systems that are predatory in nature, they try to take advantage of people
and so they’ll set a purchase price that’s way above and beyond what it ever
should be, out of reach, out of regions, it just doesn’t make sense.. – Unrealistic price. – You know,
waving the wand and so for us we say, no let’s just let the market do what its
going to do and so how do we do that? How do we set the prices? We don’t set a price,
we’ll set the minimum price we talked about that earlier.. -That’s the protection
piece that says, I can’t sell it below this or else I get hurt but we’ll
allow an appraisal at that time to actually determine what the price will
be. So by the way, the market has gone up $40,000 and they really want to buy
it then we’re going to allow an appraisal to determine that price and as long as
it is over the minimum, everything is safe. Now like Steven said, this is a
pretty important innovation and you want to take note of that because in one of
the things that you need to do next and the final step is, you’re going to find
someone that says, I was friendly, I walked through the house, I looked at the
numbers, I selected an option and then the fourth part here is, it’s time to do
a contract. – Now this contract is super important, we’ve mentioned a few
things in terms of the contract before. One of the most important parts of this
contract that we have is that we do it in two different contracts, one is a
lease agreement, just your standard rental lease agreement and the second
one is an option agreement or you are buying the option to purchase the
property.- Now if you’re going to be doing this on your own then make sure that you
use a real estate lawyer, you’re not going to have to pay tons of fees but you
need to sit down and say, I need help crafting two contracts. One of them is my
rent contract, that one’s pretty standard, you can find that one but that rent
contract needs to reference the option agreement, an option contract and you go
to a lawyer and you basically say, alright, this is what I’m doing and I
just need to write up a simple contract that is an addendum to the lease
agreement and what it needs to do, that second contract basically says, number
one, the purchase price will be determined by an appraisal at the time
of purchase number two, there’s a minimum that this can’t go below so that you
create safety. For example, if I owed 150 on the house and I had 5,000 repairs
into it and I also wanted to secure 15,000 a profits, I might say that the
purchase price is 170. So no matter what happens in the market, I can’t sell it
below 170, that’s it. The third thing you need to tell your
real-estate lawyer is that you need to take into account their consideration of
what they’ve put in and what they’ve been building and I would also add that
as long as payments are made on time, which we usually do on the 25th of the
month because your payment with the bank is due on the 1st,
I want a buffer of collecting and then paying. Make sure that’s in the contract
and if you have those basic elements, your lawyer will have some other
suggestions. Our contracts have very specific suggestions but we’re really
noting the most important things and a lawyer, you could pay a price, get that
contract drawn up and then all of a sudden, you’re good to go
to actually fully execute your lease option and this is the best part, you get
that signed contract, you collect the deposit, you collect the first month’s
rent and at that point when you give them the keys, guys, this is really a
self-managed deal, you just check in to collect the money, make sure everything’s
going great, they’re going to handle repairs, they’re going to take care of the home, you
might hear from them very very little and in two years, maybe a couple months
before their two years is up, you’re going to start saying, “Hey, how are we doing?
Is it time for you to buy yet? Do you know do you need to extend?” It’s going to be
more money down payment and hopefully they go to buy the house and then you
get to cash in on all of these gains and that’s what we’re doing here in the
second part of how you go from from an open house all the way to finding
someone for your home. Now friends, this is the end of the third video and I want
to tell you what’s happening in the fourth video. So here’s what we’re going
to be doing in our fourth and final video on lease options.. Now that you
understand what it is and why it’s beneficial, now that you know how to
market it, now that you know actually how to sell it, the last and final part is,
okay, Kris, I don’t have a house but if I don’t have a property, how do I get a
property to do this with? Like, do I need to pay $20,000 or $50,000
down payment and qualify with the bank and then this whole system doesn’t work?
Friends, if you don’t have money for a house or you don’t have the credit or
you have money but you’re looking for a more intelligent purchase strategy? Our
fourth video is going to be on sandwich leases. This video is going to be about
how do you actually buy a house with this exact same system with up to no
money, no credit and at this point, if you’re watching this thinking, well
guys I have a house or I really want to just get started, I want you to watch
that next video but you can absolutely click the link,
and when it comes to having the Flyers, when it comes to having the contracts,
when it actually has, you know, you want to have the entire system laid out, we
hope that this is giving you an incredible amount of knowledge and that
you can run with it but for those of you that really want the hand-holding, if you
want Steven and I to guide you through every step of the process and if you
want to get live with us in our community where we’ll provide you the
the support that you need and make sure that we can reach out, review your
contracts, give you the contracts, give you the flyers, if you really want the
hand-holding, we do provide that so click that link and we’ll get you that
information otherwise, we’re going to see you on the fourth and final video where
we’re gonna talk about how you get these homes with no money, no credit on a
sandwich lease. Are you starting to see why I absolutely love the system? Do you
understand why I love this strategy? Click the link, now is the time for you
to say, “Kris, how can I work with you? How can I work with your team?” It’s an option,
you can figure out how to do it on your own but guess what? We are doing this
live everyday with people and they’re crushing it and you should too. I don’t
care how old or young you are, I don’t care how much or how little you money
you got because when I was 22, I was young and nobody believed in me, lease
options secured my first million dollars and it can do that for you too right now.
Click the link and get more information.

100 Comments

  • UltimateBargains

    The future purchase price depends on a future appraisal? That's just plain stupid. The tenant/buyer is paying the mortgage and should get credit for amortization and the benefit of locking-in the purchase price (that's the whole point of an option *contract*). If the purchase price is variable and unknown, then the TB is better off just renting and saving the "applied rent credit" in a separate bank account. I've seen way too many people screwed by your method of lease-optioning.

  • Sulaiman Shah

    Hey can you explain the Dodd Frank Act, I hear you're not allowed to credit portions of rent towards the purchase price. Please clarify.

  • Michael Misilo

    Kris awesome video once again!! I would love to hear you do a video on your worst experience with a tenant. If you have one or if not what process to go through when finding the perfect tenant who isn’t crazy. Thank you

  • LiNo jAMeS

    Hey Kris, how does this work for a non-US citizen to start off with leasing and then purchasing it. And start doing real estate investment. I'm really keen in doing this.. looking forward to your reply. Many thanks.

  • Luis Inzunza

    Hey chris, does your team charge any additional fees to set up deals with us and them run the numbers and pretty much do the job for us? And how many times can you use the equity from the same house?

  • Travis Hill

    Hey kris love your videos. Very informative. Probably a dumb question but is the last box money you will take off of the final purchase of the house or credit for them to show the bank?

  • Damian Cardenas

    I got lost on the last column with the numbers, I don't know how you got those numbers 3300 7400 14800, what math you did ?

  • Aye Jello

    if they are paying $1200 a month and your putting $200 of that towards their equity and your mortgage is $1000 where's the profit?

  • neeldath reddy

    Hey your vedios are very much informative and i have a question if the tenant wat to extent there time for an year then how the down payment should be and what else is required

  • Kingdom Freedom AMV

    So I would have to keep paying mortgage for the period I havent found anyone to strike a deal with yet?

  • Gabriel Beverly

    One question that is really confusing me. So with how you started you took out a line of credit on your first house to get the second. If you do a lease option to a family, can you still take out a line of credit on that second property to get a third property? Wouldn't it affect the lease option in some way?

  • ElAmazingGaston

    This is my first time waching these series, does this work in any country, I am from Argentina and I'm broke !

  • Kareem

    Hey Limitless TV, Great video love your presentation skills. Quick question, how do you qualify people to L.O. the house without credit or going through the bank??

  • Bruno Franca

    UltimateBargains
    Há 6 meses
    The future purchase price depends on a future appraisal? That's just plain stupid. The tenant/buyer is paying the mortgage and should get credit for amortization and the benefit of locking-in the purchase price (that's the whole point of an option *contract*). If the purchase price is variable and unknown, then the TB is better off just renting and saving the "applied rent credit" in a separate bank account. I've seen way too many people screwed by your method of lease-optioning.
    LimitlessTV can you clarify? seems legit

  • MileHighMiracle

    How does the process work of making money when you have a house but still owe let's say 150k and the people renting the house want to buy it?

  • sohil samnani

    Hi kris and steve
    I have one question. If you book home value from owner for 150k but let’s say price will go up… then how will owner still sale you house for same price. Becz I’m sure he know price goes up… I’m sure doesn’t want to same price after 7 years. So how you guys handle this thing… one more question do guys return deposit to renters if they dnt want to continue after 2-4 years… pls pls pls tell us… thank you

  • Michael Chase

    So if they buy after 2 years they're getting their down payment toward the house that's money you don't make like you showed in the first video

  • Limit the Suffering

    Since you have done real estate in arizona, that is where I live, what are the rules about owning a house for so long before you can rent it out, does that apply to the lease option and is there a way around it? Thanks for the great videos and info.

  • Mohau Galeforolwe

    Hey love the series , I'm currently really looking to get into real estate and the L.O. really sounds so much more beneficial. Quick question is the deposit part of the total cost of the house or is it not?

  • heavy kutz

    What's up Kris I've watched all three videos up to this point I love what you're doing man it's helping me understand the real estate market a little better.. But I have one question, let's say you have a renter that did everything in this video and moved into the house on a lease option, what would happen if they didn't pay a month or 2 what happens then? Please and thanks for the videos

  • Thierry Papillon

    Wow okay no problem until the 3rd point. I didn't underatand a word of that, could anybody help me pls?

  • Luis Maldonado

    In your previous video you mentioned that the down payment was not refundable but on this one you are saying that the down payment is added to the additional credit that the buyer is building as a selling strategy. Can you explain that this is the part where i am confused .. do they get it back or not ?

  • Tomás Rubinstein

    hi Chris, I have a question. If the person doesn´t want to buy the house after the 2 years you have to give the person the 14,8k(in your example) or the other person just lose the money?

  • Macent

    OK so let me see if I'm following:
    – If they choose the £3K down payment, the rent (in an area w/ min. £1100pcm) is set to £1400pcm to compensate for the lower down payment.
    – Each month, the house's equity increases by £25 because the rentors are looking after it (at no expense to me since the contract states that repairs are their responsibility).
    – Therefore, after 2 years, the house's down payment value has increased by £600 (£25 x 24 months) to £3600.
    – So if the tenants stay for another 2 years, the must pay the new amount. If they choose to buy instead, the house's value is still increased anyway so I make a profit either way. If they move out then the next tenants will pay the £3600 down payment and £1400 rent and the process repeats.

  • xCCflierx

    9:54 if they dont buy the house don't you get the most gains? because when you sell it they take the 3k-10k downpayment with them in equity, and also 25-200/month in equity each month. but if they never buy then they never get that 3k-10k back and any further down payments that they make.

  • Vinny LoBalsamo

    Hey! quick question! the minimum number at which I can sell my house, is that just what my house is actually worth? for example, like you said initially with the 200k house scenario, after the market value increased my minimum number at which I could sell the house would be 210k, correct?

  • Erica Cooley

    The equity part should have been explained a little bit more in detail I really don't understand the profit or gain if I basically take 14k off the purchase

  • Keith Pilon

    *********HELLO EVERYONE! HAS ANYONE ON THIS PAGE RECEIVED OR PURCHASED A RENT TO OWN AGREEMENT TEMPLATE FROM KRIS OR HIS ASSOCIATES?? IF SO, CAN YOU PLEASE SEND ME A PRIVATE MESSAGE. THANKS IN ADVANCE!*********

  • kanoha Pedro

    How can I become a part of your team?
    Thank you for all your videos by the way, I’m new to your channel! If I ever land Real Estate(s), first thing I say to myself is “Thank you for investing your time on Kris’ channel! Now quit your job!!”

  • Brandon Stanton

    How would property tax be dealt with? Would I as the owner be paying it or would that be something that gets put into the contract and they would take care of it? Sorry if it was mentioned and I missed it.

  • Jacob Saunders

    Hi kris, im an american living in australia, 2 years ago i had no skills and no finances, i taught myself how to fix phones through youtube videos and ended up starting a business that is earning 3k a week. Im now working on my second business location and bought my first house a year ago in a blown out coal mining town that is starting to boom again in a massive way. I see myself making 200k in profit from this property if all goes well and im wanting to enter into the real estate market. Im a real doer and go getter. Id love to have a chat with you, i need mentors. All the best and many blessings, jake

  • Cash Maxout

    You taught me more in one night then all the other videos . I'm only 18 and im trying to get my real estate license in 6 to 8 months . I really like ur videos thanks man

  • 4 Corners of the world

    Did they say after the 2 years of leasing if the tenants want to extend they need to put down another upfront deposit?

  • Kyle Keenan

    Say at the end of the video the family does buy the home how does that work? Do you have a video about that or could you send me a link much is appreciated.

  • Kayla Garcia

    What's the maximum years you would lease the contract to a family? You said 2 years I'm guessing you wright a new one if they can't buy in 2 years but what is the maximum amount of years you would recommend?

  • Marcelina Einstein

    This is getting better by each video, I have never head of a sandwich lease? Wait, can't wait to see your 4th and final video on option to buy/lease.
    Marcelina Einstein 👍🤝

  • Real Estate

    he did the first wrong. its 3600.

    25 x 24 months = 600. PLUS the down payment they gave you 3,000.

    100 x 24 months = 2,400. PLUS the down payment they gave you 5,000.

    200 x 24 months = 4,800. PLUS the down payment they gave you 10,000.

    so

    3,000 Plus 600 = 3,600

    2,400 plus 5,000 = 7,400

    4,800 plus 10,000 = 14,800

    Do you understand now?

  • Fiftys Lady

    Kris, I love your videos and they are so inspiring. Thanks for doing all that you do!
    I can't find the answer to this questions anywhere and have been searching and searching, could you shed some light?
    You say PM companies don't deal with lease options so how do I get a tenant? Am I supposed to fly out each time I hold an open house? Or can I hire someone to do showings/do background checks/deal with evictions? I'm so stuck, any help I would be grateful for.

  • Donna Re' Brown

    Do you charge interest? Do you put together an amortization schedule? What is default process? Is the loan agreement filed with court?

  • Jeremy Vanbrunt

    I don't really see a ton of incentive for the person renting. I mean I get their are some positives but financially it doesn't feel like much is gained.

  • randomsubscriber100

    Hey kris I bought the course a few days ago and I haven’t been contacted by an agent on what to do next. I am very determined to get started but not sure how to organize all the Info I was given to put into work. Any help?

  • marc beauvois

    I was wondering what if someone comes in and say they just want to buy the home instead of the lease option?

  • Irel Pio Mercado

    Hi guys, where will you base the down payment , monthly rental, the rebates for equity from? Do you need to have basis for that or its your own judgement to have that price? Your response will be highly appreciated 😀

  • Deiontae Nicholas

    I just started watching these videos and I am super excited about my future. Thank you for your energy and intelligence being shared!
    I am a 22 year old college kid who wants to be successful, this is a vehicle I would love to use

  • Kyson_Lowet 2k18.01.21

    In 16, Canada

    I need to join a collective or .. community of people to learn.

    How would I get involved with you guys?

  • Christopher Miller

    Great info and great energy kris & Steven. However, in my experience, things don’t always run as smooth with renters as you might like. Expect late payments at some point in the lease term. It happens more often with these types of deals.

  • Bobby Lim

    If The Renter decided  to purchase the house , do you deduct the down payment  towards the price of the house ? thanks…!

  • Create & Build

    Thanks for making this great informative videos series Kris! I have several properties im thinking of soing lease options but not sure how yoi structure legally to comply witj dodd frank?

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