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The Anatomy Of The Deal Series:

The Co-Operative Strategy

How You Can Generate Quick Cash Flow In The Creative Real Estate Niche Of Lease
DeFiore Enterprises
5640 North Marty Avenue, #182
Fresno, CA 93711
Telephone: 559-440-1358
Fax: 559-440-1358, *9



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Dedication 7
Purpose 8
Who Are Chuck and Sue 9
Chapter 1 What Is A Lease Purchase Deal? 11
The Lease Purchase Deal 12
Chapter 2 Lease Purchase Basics and Strategies 15
Lease Purchasing - The Basics 15
Ways To Generate Income 18
The Strategies 19
Chapter 3 Breaking Down the Anatomy The Parts of the Deal 25
The Basics of the Lease Purchase Deal 25
What Do I Need To Start? 26
Chapter 4 Selecting Property And Getting To Know The Tenant/Buyer 28
What To Look For When Examining A Property 28
Various Factors That Can Affect Home Sale Prices 30
Sellers: It Pays to Prepare 33
Create Space 34
Neutralize to Maximize 34
All Systems Go 35
Outside Check 35
Inspection Plus 35
Show and Tell 35
Vacancy Protection 35
Hot Topics 36
Invisible Hazards 37
Buying An Older Home: Special Problems 37
Lead Paint 37
Lead and/or Galvanized Pipes 38
Deteriorating Foundations 38
Insect And Water Damage 38
Little Or No Insulation 39
Single-Pane Windows 39
Outdated Climate Control 39
Outmoded Wiring 39
Remodeling 40
They Don't Make `em Like They Used To 40
Some Thoughts On Tenant/Buyers 41
Time for Your First Home? 41
A Scenario To Save By 42
How To Get There From Here 43
It Helps To Have Cash 45
The True Cost of Buying a House 45
Repair Costs 47
How Much House Can You Afford? 48
The Best Buying Advice 50
Make A Wish List 51
Aging Choices 52
New Doesn't Mean Perfect 53
Put Yourself There 53
Be Sure Before It's Too Late 54
Conclusion 54
Chapter 5 Finding the Property 56
Using the Newspaper and the Internet - Our Two Favorite Methods 56
Other Publications 59
Chapter 6 Calling On The Properties 61
Get Ready to Call 61
Chapter 7 Meeting With The Seller 71
Face To Face 74
Chapter 8 Advertising the Property 79
Dealing With Tenant/Buyers and Credit Checks 80
Using Third Party Payees 87
Chapter 9 Finalizing The Deal 89
Some Deal Numbers 91
Chapter 10 The Proper Contract 95
Having The Proper Contract 95
The Pitfalls 99
Chapter 11 Conclusions 106
Chapter 12 Final Thoughts On Lease Purchasing As A Business 110
How Do You Want To Spend The Rest Of Your Life? 112
How To Give Yourself A $20,000/Year Raise Without Asking Your Boss 117
What Can I Realistically Earn In A Lease Purchase Business? 120
Time, Knowledge And Energy; What They Should Mean To You 122
A Five Thousand Dollar Christmas Present 124
Sometimes Dreams Do Come True 127
How To Make Everybody Happy And Earn $250 Per Hour Doing It 131
How To Earn $2,500 In Two Hours 134
Being A Tenant/Buyer Means You Never Have To Say You've Wasted Your Money 137
A Few More Examples Of Lease Purchase Property 140
We'd Like Your Opinion 141
Quick Reference Flow Charts, Sign And Flyer Examples 143
Network Partners Flow Chart 144
Lease Purchase Deal Steps Flow Chart 145
Finding Lease Purchase Property Flow Chart 146
Finding The Tenant/Buyer Flow Chart 147
Rent To Own Sign Example 148
Flyer Example 149
Lease Purchase Contracts And Forms 150
Telephone Prospecting Outline 151
Lease Purchase Property Research Form 153
Tenant/Buyer Evaluation Form 155
Finance Summary 158
Assignment of Agreement 159
Residential Lease Purchase Agreement 160


This book is dedicated to each other, without one another we would not have survived.
Through all the trial and tribulations, good and bad, ups and downs we have stood by
each other and have become stronger.
Strength in numbers. Ourselves, family, very good friends, and our four footed friends
who give us that special kind of attention and love...the unconditional kind.

The purpose of this book is to get you started in the specialized niche of Creative Real
Estate known as Lease Purchasing utilizing the co-operative strategy.
The book discusses the various lease purchase strategies available to you, but the focus is
on breaking down the steps of the co-operative strategy. It will take you through the
whole deal process.....The Anatomy Of The Deal.
The Anatomy Of The Deal is for those who want to utilize the niche of Lease Purchasing
on a full time, part time or spare time basis. It is for those who want to get started quickly,
with a minimum of reading, and a minimum risk and cost factor.
Realize however, that hard work and dedication are necessary as in any endeavor. If you
expect to be a millionaire by next Tuesday, or a get rich quick scheme, then this book is
not for you.
There is no magic formula - just hard work and dedication.
Remember, if it sounds to good to be usually is! And anything worth having
means hard work.

Who Are Chuck and Sue

Chuck and Sue DeFiore are the founders and principals of DeFiore Enterprises. DeFiore
Enterprises is comprised of the following divisions: Home Business Consulting, Real
Estate Investments, Publishing and Coaching.

Chuck and Sue DeFiore are investors, consultants, and coach/mentors. They specialize in
two areas. The first, a niche of Creative Real Estate known as Lease Purchasing; the
other, in the establishment of home-based businesses. Through their consultations and
investments in Lease Purchasing, they help sellers move their property in 30 days or less;
and help buyers get into their dream home today, that they can buy tomorrow. Chuck and
Sue are active both locally and nationally.

They are the authors of "Who Makes It Happen, We Do: Back On The Road To Success
With Creative Real Estate", and "The Anatomy Of The Deal Series: The Co-Operative
Strategy: How You Can Generate Quick Cash Flow In The Creative Real Estate Niche Of
Lease Purchasing" and "The Anatomy Of The Deal: Consulting Your Way To A Six
Figure Income In Creative Real Estate".
They have published numerous articles on lease purchasing and have five extraordinary
manuals, considered to be the most complete in the industry. In addition, they have
produced tapes sets on Lease Purchasing, Home-Based Businesses and their
extraordinary Expert Tape Series.

They have developed a revolutionary coaching program. The Partnering For Your
Success coaching program is geared towards those folks who want or need to change
their financial situation. This is a unique program where you work with Chuck and Sue
for one full year. It has a low initial cost and together they share in your success.
They are renowned innovators for the home-based business market, through their
newsletter, Home Business Solutions, and their support group. They have coached
individuals in business start up and all facets of home office development. Their expertise
has allowed them to work with some of the largest corporations and governmental
They have written numerous articles on operating a home-based business, and have been
written about in New Business Opportunities Magazine, Small Business Opportunities
Magazine and Income Opportunities Magazine to mention a few.
Chuck and Sue's motto is "Who Makes It Happen, We Do". They have taken the
experiences learned from their successes and yes, their failures and applied that to their
consulting and coaching business.
Chuck and Sue will work with you on a one on one basis to help you reach your potential
and achieve the success you deserve. They believe in "Who Makes It Happen, You Do".
The DeFiore's currently reside in Fresno, CA where they operate a successful Lease
Purchasing and consulting business.

Chapter 1
What Is A Lease Purchase Deal?
A lease purchase is a process that combines a basic rental lease with an agreement to
purchase, or with an option to purchase the property. The Buyer (or Lease Purchaser)
pays to the seller a monthly payment that usually approximates a rental amount or a
typical mortgage payment on the home. A percentage of that payment is typically applied
towards the purchase price. At the end of the term, the buyer has the right to purchase the
property for the price and terms to which both parties have previously agreed.

Or, put another way, a lease purchase is essentially a rental agreement combined with a
purchase contract with pre-negotiated terms. The buyer leases the property for a specific
period of time and then purchases the property before the end of the lease agreement.
Sales price, length of rental, rental amount, rent credits, escrow instructions, etc., are all
contained in the agreement.

You will find that Lease Purchasing is a wonderful way to control property without all the
accompanying headaches of banks, mortgages, taxes or immediate loan qualifying. Lease
Purchasing gives you the right to buy property, but not the obligation to buy.

The Lease Purchase Deal

The Lease Purchase Deal involves the following individuals: yourself (of course), the
seller and the tenant/buyer. It also could involve another investor, if you flip a property,
but we are getting ahead of ourselves. For our purposes in The Anatomy Of The Deal, we
will be working with you (the investor), the seller and the tenant/buyer.
As an investor, lease purchasing offers you the following advantages: maximum leverage;
minimum cash needed; no maintenance; wonderful cash flow, excellent profit potential;
no banks, lawyers, Realtors, Escrow's, mortgages, etc. needed; minimum risk and control
without ownership or overhead.

As a business owner, you can start your lease purchasing business with a minimal amount
of capital; little or no credit is needed; wonderful cash flow can be generated
immediately; excellent and realistic first year income can be achieved; the business can
be started simply, no major equipment to buy; the business can be operated full time, part
time or in your spare time; and best of all, the business can be operated from your own
home office.
For the seller, lease purchasing offers: usually top sales price for the property; large
market of available buyers at all times; better quality tenants; higher rent; non-refundable
option consideration (down payment) which is the seller's to keep; all minor maintenance
is delegated to the tenant/buyer; seller remains on the deed (it is still his property until the
option is exercised); no fees to pay (especially Realtor commissions, closing costs, etc.)
and a competent accountant or tax attorney can file legitimate write-offs, deductions,
exchanges and other mechanisms provided by law.

For the buyer, lease purchasing offers: low down payment to get into property;
qualification restrictions are not as great; past credit problems are not a road block, like in
conventional procedures; option consideration (down payment) can be fully credited to
the purchase price; your rent money is working for you (part of your rent payment can be
credited to the purchase price if paid on time); purchase price is locked in ahead of time;
gives you sufficient time to check out all the features and faults of the house; time to
check out the neighborhood; puts you in legal control of a property for a specified period
of time without having to actually own the property; time to shop for and obtain the best
financing; major maintenance and repairs are the responsibility of the owner (only minor
maintenance is your concern); and profits, in case appreciation occurs and you decide to
sell in the future. The difference between what you contracted for (paid) and any increase
in fair market value is all yours if you sell the property.

As you can see there are advantages for the investor, business owner, buyer and the seller.
You can use these advantages in your dealings with buyers and sellers. Remember to
emphasize them when negotiating with a seller or tenant/buyer. The advantages you focus
on will depend on the strategy you use, however, for our purposes you can focus on the
majority of them, since you will be using the co-operative strategy.


Chapter 2
Lease Purchase Basics and Strategies
Lease Purchasing - The Basics
The basics involved in lease purchasing are the newspaper, your computer, the telephone
and your sales, negotiating and closing skills. The basics of what you need to complete
the Lease Purchase deal will be covered in detail in upcoming chapters. However, you do
need these basic skills to start. You need to have the drive, time management and
organizational abilities to go through your prospecting materials and weed out the

You should have basic computer skills so you can communicate with buyers and sellers if
you want to work on the Internet. You don't need a computer to do Lease Purchasing.
However, you will need something to prepare correspondence with.

You cannot have an aversion to cold calling. The telephone will be your most important
tool for lease purchase deals. If you don't want to make calls, then don't expect to make
deals. This might sound harsh, but it is the truth. Too many people think the deals are
going to fall into their laps. Yes, by employing our full manual, "Lease Purchasing As A
Home-Based Business" (http://www.homebusinesssoluti/products/products.htm) and
program the deals will come to you, but you still need to talk to people and find out if that
deal is for you.

The first contact with the seller, building a rapport, is the most important one. It cannot be
done quickly, by just asking if they want to do a lease purchase, first you have to find out
what their needs are, and if a lease purchase is even feasible. In the beginning this will
take time. One of the reasons we do extensive screening for our coaching students is to
weed out those who want to get everything done too quickly. They are the ones who don't
follow our scripts and want to skip steps. They are the ones who are too impatient and in
the long run they take twice as long to get their first deal. They are also the type of
students who think they know better than we do — not.

So, have a little patience and follow the process outlined in The Anatomy Of The Deal.
Please don't try to skip steps, thinking you know a better way, a quicker way. Some things
just take time and building that relationship with the seller is one of them.

Lease Purchasing is a wonderful business. However, like any other business you have to
work at it. If you have poor attention to detail, however, this business might not be for
you. You need to be able to keep good records of whom you spoke to and did business

Also, if you are impatient and don't like "hand holding", rethink going into lease
purchasing. Many deals will involve you walking the sellers and buyers through the deal,
and giving constant reinforcement to them. Also, although the risk level is minimal, there
are some risks. You may contract for a property and not move it.

We feel however that lease purchasing provides a win-win scenario for all parties. We
help sellers move their properties, buyers get into a property they might not have, and
make money for ourselves in the process, a win-win scenario for everyone.

We, however, have good contracts that support all parties, and employ very ethical
business practices, please be sure you do so also. If you can't work with these basic
tenants, then lease purchasing is not for you.

Ways To Generate Income

Lease Purchasing provides you with a variety of ways to make money.

Some of them are:

You make money with the assignment fee. The assignment fee is the money you receive
from selling a contract you have on a property. This will vary depending upon the
strategy you use.
You can also make money on cash flow. Cash flow is the difference between what the
tenant/buyer pays you and the obligation you have on a property. We also, on a co-
operative assignment, negotiate with the seller for a percentage of the positive cash flow.
You can receive money at closing. When the tenant/buyer exercises the option to
purchase the property, and if the deal is structured in this way, you can receive money at
the closing, if you're employing the sandwich strategy.

You can flip a contract or sell a pure option to another investor and receive money in this

You can consult with buyers and sellers. Sometimes the seller just doesn't want you in the
deal or a buyer wants to do it themselves. In these cases you want to be able to consult
with buyers and sellers and show them how to do it. You can charge a consulting fee to
help buyers and sellers with lease purchasing their property.

You can create your own high quality notes which can provide you with a steady monthly

The Strategies
As discussed earlier, for our purposes we're concentrating on using the co-operative
strategy in The Anatomy Of The Deal. It allows us to get into a deal with little monetary
outlay and out of the deal once we find the tenant/buyer to assign it to. However, we
would be remiss if we did not mention the other strategies available to you with lease

First, the co-operative strategy, and the one that The Anatomy Of The Deal focuses on. It
is the easiest and quickest for the beginner to start with. With this strategy, you are not
making yourself liable for any payments to the seller. You also don't have to put down
any large sums of money for option consideration. In fact, for the co-operatives that we
do, we put down one dollar of option consideration. Some states require more. This is
something you can check on with your local real estate group or real estate board.

The co-operative is used when the seller may not want to give over total control of his/her
property. The seller wants some say as to who goes into the property. The seller may also
want some of the assignment fee, which is why we put down one dollar. Once we assign
the contract to a tenant/buyer, then the seller receives half of the assignment fee, and we
receive the remaining half, or whatever monetary distribution we have decided on.

In a co-operative, we set the strike price (contract selling price) at or a bit above market.
We try to structure the rent to obtain positive cash flow. We also adjust the property price
to reflect the amount of rent credit we want. For example, if we want to offer $500 per
month rent credit, that equals $6,000 at the end of the first year. We will suggest raising
the price of the house by the same amount. Therefore, if the house had a price of
$110,000, we would make the price $116,000. This is a selling point, the rent credit is not
costing the seller any money out of pocket. Be sure that the market in your area will
allow you to adjust the price in this fashion.

In addition, by structuring the rent to yield positive cash flow, you are also making the
seller money, another sales point. Also, remember this can also be an additional income
stream for you, if during your initial negotiations with the seller you negotiate for a
portion of the positive cash flow. Remember, this is one of the options we give sellers
when working with us.
Always remember your goal is to get the property under contract and assign the contract
to a qualified tenant/buyer. By making it more attractive to the seller, your job becomes

When you assign the contract, with the seller's approval, you will collect an assignment
fee. This assignment fee is typically applied to the purchase price, if there is enough
equity in the property to cover it. If not, the strike price of the house can be raised. Please
note, however, do not raise the price more than 5% or so over market, otherwise you are
doing a disservice to the tenant/buyer. Remember, this should be a win-win situation for

The co-operative strategy can be utilized for all types of property: single family, mobile
homes, townhouses, condos. It also works well with sellers who are semi-motivated; with
investors who have rental property and for those sellers not in a rush to move their

The other strategies available to you in lease purchasing are:

The Sandwich Deal.

This is when you lease purchase the property and then sub-lease to a tenant/buyer. You
are taking on the responsibility for all payments to the seller. However, it also affords you
great profit potential. You can collect money up front as option consideration, you receive
the positive cash flow and you can make additional money at the end if the option is
exercised. For those of you not familiar with the term positive cash flow, this is the
difference between what the tenant/buyer pays you and what you pay to the original

In a sandwich deal you are dealing directly with the seller. The contract is between you
and the seller. So in this case you want to get the best deal you can for yourself, as little
money down as possible, covering his/her payments only, using a third party payee, and a
good price on the property over a minimum of a 2 year or more period before having to
purchase the home. This allows you to give your tenant/buyer a one year or two year
term, rent credit, and for you to make money on the back end (if the tenant/buyer
exercises the option).

With the next strategy, the straight assignment, you can obligate yourself for the monthly
payments or you may negotiate no payments until the contract is assigned. This will
depend, in part, upon your skill as a negotiator, and on the seller's needs. You will put
down more option money with this method than you would in a co-operative, however,
you will recover it when you assign the contract. We still would not put down much
option money. We try for $100-$200; or at the most one month's payment (mortgage).

You are looking for favorable terms in this strategy because you want to move the
contract quickly. With this strategy we look for a strike price a bit below market, monthly
payments very close to or exactly what the seller is paying and we want a multiple year

In the straight assignment you contract for the property and assign or sell that contract to
a tenant/buyer. This does not require the seller's approval. In the straight assignment you
make your money in assigning the contract to a tenant/buyer. So again you want to
negotiate good terms with the seller, so you can make money with the assignment fee.
Remember too, you can sell a straight assignment to an investor.

The pure option. The pure option on a property allows you to purchase the home at a
future date. The terms also are set. You can take the pure option and sell it to another
investor. Again you want to negotiate good terms for yourself, so you can make money
when you flip this to an investor. Here, you are typically looking for property valued
under the current market.
So while The Anatomy Of The Deal concentrates on using the co-operative strategy,
where the seller has a say in who goes into his/her property (although, the way we do it, it
is a non-questioning one), be aware that there are other strategies in lease purchasing that
you can use. Again, the co-operative is chosen since it presents the least amount of
monetary outlay, and the least amount of risk, since once the paperwork is signed over to
the tenant/buyer you are out of the deal.


Chapter 3
Breaking Down the Anatomy The Parts of the Deal

The Basics of the Lease Purchase Deal

The basics of a lease purchase deal encompass the following: using the newspaper and
the Internet to find your properties; the telephone and cold calling to obtain a property;
negotiating with the seller and getting the contract signed; placing your ads for the
property; finding and dealing with the tenant/buyers; moving the property and finishing
the lease purchase deal.
For example, let's say you contracted for a property and expect to receive a $5000
assignment fee. This fee is not being split with the homeowner. This is your gross profit
from the deal. The expenses you subtract from this are the cost of advertising and/or
marketing the property (newspaper, Internet, signs, credit checks). However, for credit
checks, you can make money on them also if you charge more than what you are charged.
For example, we charge $35 for an individual and $50 for a couple, we are charged $15
per report, this will vary however, so make the appropriate adjustments if you need to.
Other expenses you might incur are travel expenses (gas, maintenance on car, insurance,
etc.); copy expenses for flyers and any other miscellaneous expenses.

On average your expenses should run less than 10% of the assignment fee. In fact, our
rule of thumb is if a property costs us more than 10% we drop the property. We make an
estimate of the expenses before we take on a property and if it is more than 10%, we will
pass on the property. Remember, your time is money, so if you have to run back and forth
too many times, especially with today's gas prices, you can rack up costs very quickly.
However, overall, you will have a hard time finding another business that yields a 90%
net return of a transaction. Don't get so worked up trying to estimate costs that you lose
out on a property.

What Do I Need To Start?

To start, you need the following: a telephone, a computer (if you're going to utilize the
Internet), a newspaper(s), along with some drive, ambition and perseverance. Your basic
steps for the deal are as follows:

Go through your newspaper for FSBOs (For Sale By Owner) properties.

Get on-line and get a list of FSBOs in your area.
Start calling. Start by calling from the newspaper, the houses for sale, then the
townhouses, condos, and finish with the rentals.
Get a deal from your calls. Be sure you get as much information as possible by telephone,
the only reason you want to leave your office is to get the seller to sign your contract.
Place your ads, flyers and signs.
Screen your tenant/buyers calls.
Do your credit checks.
Inform seller of finding a tenant/buyer.
Meet with tenant/buyer to sign paperwork and get moneys.
Send out final letters to seller and tenant/buyer.
Go out for a nice dinner with your new found wealth.
The upcoming chapters will deal with the steps listed above.

Chapter 4
Selecting Property And Getting To Know The Tenant/Buyer

Before we get started with the actual mechanics of using the lease purchase advantage,
there are a number of factors you should look at first. Remember, when you are looking
at prospective investment property, you will be wearing two hats, your buyer hat and your
seller hat. Why, because you need to think like a buyer when acquiring the property and
then think like a seller when looking for the tenant/buyer.
You need to be able to select good property with appeal so that you can move it in the
fastest time possible. In order to accomplish this, the home must be in the best condition,
both physically and visually, to attract the greatest number of tenant/buyers. The
following hints and ideas will help you get this done in the least amount of time.

What To Look For When Examining A Property

One of the first things we do when we get to a property is walk around and look at the
room size. We try to picture our furniture in each room. Would it fit? Can you place a
king size bed in the bedroom, with dressers and still have space to walk around
comfortably? Will the living room or family room hold a wide screen television without
having to sit on top of it to view the picture? Is there space for a surround sound system,
entertainment set, wall unit, etc.?

Can two people work comfortably in the kitchen? Are the counter tops large enough to
hold a coffee machine, microwave oven, toaster oven, etc. and still have space for actual
cooking? Is there ample cabinet space for dishes, glasses, pots, etc.? Is the sink a double
or single? Can you fit a table in the kitchen for quick meals?

How about the dining room, will it hold a table and hutch? Can you fit six chairs at the
table? Does this still leave serving room around the table?

Is the garage a two or three car one? Does it have room for storage? Can shelves be put
up in the garage? Is the garage attached or stand alone?

How about the yard, is it landscaped, grass or desert look? Can you fit an out door table
and chairs, BBQ grill, etc. in it? Does it have a patio? Is it fenced? If fenced is there
outside access to the yard from a gate or is entry to the yard through the house or garage.

Are the secondary bedrooms large enough? Remember, some folks use other bedrooms as
offices, exercise rooms, libraries, etc. This is especially true with baby boomers whose
children may be grown and out of the house.

The best way to start to learn what to look for in property, is to visit as many open houses
as you can. Walk around with the above in mind. Pretty soon, looking at houses this way
will become second nature.

Why have you go through this, because your tenant/buyers will be doing this. If the house
is not appealing to you, odds are it won't be to a tenant/buyer.

The following sections will point out some other areas you should be aware of from both
the standpoint of the seller and the buyer.

Various Factors That Can Affect Home Sale Prices

Figures published in a study by the National Association of Home Builders (NAHB)
estimate the value of various factors that will add to or detract from the price of a house.
For its study, the NAHB assumed that the typical house would have about 2,000 square
feet of floor space, a basement, a garage, three bedrooms, and two baths plus three other

We can apply the NAHB figures to our own local conditions to make the percentages
shown more relevant. The listed percentages can serve as guidelines only, because
national averages may not fit regional factors. For example, the NAHB study assigns a
penalty of -3.1 percent for houses having no basements, but in cold climates a house with
no basement would have a price penalty greater than -3.1 percent.

The figures reinforce Realtors' claims that house location is of prime importance. The
NAHB study shows that being within 300 feet of a body of water (lake, river, or pond)
can add 27.8 percent or more to the value of a house. On the other hand, for a house in a
neighborhood that has some abandoned buildings, house values may be reduced by 30.7
percent. A neighborhood that has falling real estate values because of past deterioration
may see dramatic price rebounds if remodeling crews move in. Any rehabilitation or
remodeling activity that reflects renewed interest in an area can quickly drive up house

In many busy households there are two or more breadwinners trying to get off to work in
the morning, so having two bathrooms is a prime selling point. Having no second
bathroom may reduce the value of a house by 18.5 percent, while having a third
bathroom can add 17.5 percent - about $25,000 - to the house value, far beyond the actual
cost of the bathroom.

A fireplace is a desirable feature in most climates, and by NAHB figures having a

fireplace can add 10.8 percent to house value. For a house having no garage the NAHB
subtracts 14.6 percent; in cold-winter climates the garage is more important than it is in
warmer climes, so the penalty for having no garage in northern states may be greater than
in the NAHB average.
Adding a fourth bedroom may increase the house value by 5.2 percent. Adding a room
other than a bathroom or bedroom, such as a family room, bumps the value up by 5.9
percent. Adding 500 square feet of floor space is worth a 9.4 percent bonus.

For today's working couples the emphasis is on home comfort. A house that lacks central
air conditioning may have a price penalty of as much as -12.8 percent. If one subtracts
that percentage from average selling prices the penalty will exceed the cost of the air

Location factors that can detract from the value of a house include neighborhood streets
that are in poor condition, which may reduce the house value by 6.5 percent, a significant
pothole penalty. Visible trash or other signs of neglect around nearby houses can reduce
not only the value of the offending neighbors' homes but can reduce the value of all
houses in the area by 14.5 percent.

Sellers: It Pays to Prepare

Want to get the highest price possible for your home? Of course you do! A little time and
effort before you put out a "For Sale" sign can make a big difference in the dollars you
get. Here are some proven tips for increasing the value and desirability of your property
by experts in the field.

Most experts agree: buying or selling a home ranks among the most stressful experiences
of adult life. It can get to the point of being an emotional battle of wills between buyers,
sellers and real estate agents all wanting the best deal for the house. By the time a home
inspection is arranged, the buyer is convinced he's paying too much for the house, the
seller swears he's giving the house away, and the real estate agents are hoping to keep the
deal alive.

In spite of all this, the home inspection is a critical process. Nobody wants to buy a "bad"
house. The inspector's job is to carefully check the home's structural and mechanical
systems for problems that can lead to big repair bills later. However, there are many
things you can do to get the home ready for an inspection and ready to bring in the
highest price possible.

Create Space
Most people buy homes because they've outgrown their existing house or apartment and
need more space for a growing family. As a home seller, your product is that space - the
more space you have to sell them the higher the price you're likely to get.

Here's how you can create more space, even in smaller houses:
eliminate excess furniture
move storage
clean out your garage
take every opportunity to create a wide-open look.

Neutralize to Maximize
After cleaning the place up, it's time to paint. Relocation firms, which help big companies
move employees across the state or across the country, often wind up having to sell the
employee's former house as quickly as possible. Their trick? They immediately paint the
inside of the house, top to bottom, with an off-white paint and then follow up by
installing a low-grade, tan wall-to-wall carpet.

All Systems Go
Next, get all of your mechanical systems serviced by qualified contractors. It is generally
not expensive and is extremely important in presenting your property as well cared for.

Outside Check
Once you're finished inside the house, do a little work to freshen up the exterior. Replace
broken windows, repair rotted trim, cut back trees that are too close to the house, and
invest in some new landscaping.
Inspection Plus
Even before you put your house on the market, a professional home inspection is a
valuable way to get expert help in the pre-sale process. While buyers will often want their
own inspection, you will be far ahead of the game if you have an impartial expert check
your house.

Show and Tell

There may be things that you don't want to or can't fix. If that's the case, you should be
ready to tell potential buyers about problems: with mechanical systems, structure, and
grounds. The days of "Caveat emptor" ("Buyer beware") are over.

Vacancy Protection
Real estate experts know that vacant houses are hard to sell. That's why many
recommend having relatives, friends, or well-screened tenants move in on a month-to-
month basis, just so the home is lived in. However, if you must leave your house empty
before it sells, make sure you protect yourself by maintaining insurance.

Hot Topics
There are many things that can turn a dream house into a money pit. Whether they're in
the house you're trying to sell or one you'd like to buy, here are some of today's hottest
• Underground Oil Tanks
• Wet Basements
• Good Gutters
• Soil Slope
• Hungry Bugs
• Minimize Moisture
• Distance Wood
• Cut Ground Contact
• Rotting Roofs
• Ventilate
• Fix Flashing
• Timely Repairs

Invisible Hazards
You can't see or smell these invisible hazards, but they can be deadly.
• Carbon Monoxide
• Radon
• Lead

Buying An Older Home: Special Problems

Let's face it, today's cookie-cutter houses just don't have the architectural charm of
yesteryear's homes. Nor are they usually built with the same fine craftsmanship. That's
why older neighborhoods - with homes built from the late 1800s through the 1940s - are
so hot these days. It seems everybody wants an old-fashioned house like Grandma used
to live in.
As charming as they are, however, older homes can be a real challenge to own and
maintain. If you're in the market for a "venerable" house, here are some things to keep in

Lead Paint
Almost all older homes have lead paint. Lead was a common paint ingredient until the
mid-1970s when it was banned by the Environmental Protection Agency. Lead paint dust,
if ingested or inhaled, is toxic and can cause cognitive and neurological problems,
especially in children.

Lead and/or Galvanized Pipes

Really old houses may have lead water pipes, which can adversely affect drinking-water
quality. These were often replaced many years ago with galvanized pipes or, more
recently, with copper piping. That took care of the lead problem, but galvanized pipes are
prone to corrosion, as are the fittings that connect galvanized or lead piping to copper

Deteriorating Foundations
Any home may have a foundation problem, but homes 50 years old or older may well
have more serious problems. Badly cracked or sagging walls, crumbling mortar, or
deteriorating concrete are all conditions that may be found in the older house.

Insect And Water Damage

Having been around for such a long time, old homes have had ample opportunity to
suffer an infestation of termites, carpenter bees, carpenter ants, or other wood-boring
insects. Such insects can cause considerable damage to support beams, posts, and other
wooden portions of the structure. Likewise, water can damage wood when, over many
years, it gets into places it isn't supposed to.

Little Or No Insulation
Insulating was not a priority when energy was cheap. Hence, many older homes have no
insulation in the exterior walls and little or none in the attic.

Single-Pane Windows
Those great-looking divided-light wooden windows are likely to be made of single-pane
glass - offering little protection from the elements. Quite often, storm windows were
added somewhere along the way, but they're no match for today's energy-efficient thermal

Outdated Climate Control

Those old oil-fired, hot-water (or steam) heating systems can last darn near forever if
maintained properly, and radiators do provide a nice, cozy heat. But an old oil burner can
be pretty energy-inefficient - and with no heating ducts throughout the house, there
probably is no central air conditioning.
Outmoded Wiring
If a home is old enough - from the turn of the century, let's say - it might actually have
old-style knob-and-tube wiring. By now, it's probably worn out and a real fire hazard. A
more recently built home may have more modern wiring, but it still could have an old
fuse-box-style electrical panel, which is probably overloaded and inadequate for today's
modern (appliance-loving) family.

Probably the worst thing that can happen to a great old home is an ill-conceived
remodeling job. Too often, big additions are just stuck on the back or side with little
respect for the architectural integrity of the entire structure.

They Don't Make `em Like They Used To

In some respects, maybe it's a good thing they don't make `em like they used to. Today's
homes are safer, more comfortable, and more energy-efficient than their older siblings
ever were. But those old Victorians, cottages, and bungalows are light-years ahead when
it comes to charm.

Take care to identify and correct the special problems of your older home, and you'll have
the best of both worlds.
Also be aware that many of the people in older homes have already made some of the
above improvements already. So take a list with you when you visit an older home and
ask the seller if the above things have been updated.


Some Thoughts On Tenant/Buyers

You never get involved in the financing for a tenant/buyer, however, there are some
things you should know which will help you in speaking with a prospective tenant/buyer.

Time for Your First Home?

When is the right time to buy your first home? Not only are there a number of factors to
consider, but it's also the biggest financial decision you'll face.

First, let's collect a little background information. For that we go to the 1997 US
Statistical Abstract. The average amount of debt for a family under 35 years old is about
$10,000 for credit cards, installment debt, and lines of credit combined. But there can be
more. When many students graduate they get not only a degree, but also a bill for all their
college loans. Add a car payment or two and it adds up pretty quickly.

Next for some housing info. About one third of families in the 25-29 age bracket own
their own residences. And the cost of those homes keeps going up. We found that the
median price for a home was $118,000. Naturally, there's a big difference depending on
where you live and the size of the home.
A Scenario To Save By
Now let's take a look at a hypothetical situation.

Say your household income is about $60,000 per year. You currently have $55,000 in
debt from credit cards, school loans, and car loans. You live in a one-bedroom apartment
($690 per month) and have a nine-month old son.

Your landlord says your child can be up to three years old in the one-bedroom with you,
and then you have to move to a two-bedroom, which would be about $900 per month.

Are you better off to try to get a mortgage on a house and also reap the benefits of taxes?

Or should you just get the two-bedroom apartment for awhile and pay off debt?

Your plan would be to save up 10 percent for the down payment on a $100,000 house.

The first consideration is monthly expenses. We'll assume that the apartment will stay at
$900 per month.

Compare that to owning a home. There will be a mortgage to pay.

Suppose you save a $5,000 down payment on a $100,000 house.

A 30-year, 7 percent mortgage will cost you $632 per month.

To that we'll need to add property taxes, maintenance, insurance, and utilities - say
another $3,000 per year or $250 per month.

You will save a little in income taxes, about $1,200. So your monthly expenses will be
about $782 ($632 + $250 - $100).

It's important to look at the specific house you're considering when you do this exercise.

In some areas, the property taxes alone are more than $3,000 yearly.

Other older homes may require costly repairs that could consume big bucks in a

Each house will be different, so do your homework.

This is one of the reasons so many individuals opt for lease purchasing their home. They
get all the perks of having a home, but none of the headaches.

How To Get There From Here
So far in our scenario, it looks like you should consider buying. The next question is
whether you can you get there from here. You have about two years to get ready for that
house. During that time you'll need to get your debt down, save a down payment for the
house, and also put aside some money for emergencies.

With lease purchasing, you don't have a waiting period. You can lease purchase now.
Remember, for the length of your lease purchase term your payments remain the same.

We'll start with the debt. If you're paying $2,000 each month and don't add anything to
the existing account, you'll have it paid off in 34 months. Two years from now when you
want to buy the house you'll still have a balance of $18,500. Lenders won't like that
balance, but the fact that you've been reducing it should help.

There's also still the matter of a down payment. If you can save an additional $200 per
month and earn 4 percent on the money, you'll be right at the $5,000 target in two years.
To be safe it would be a good idea to have some emergency money available. If you
could increase the monthly savings to $300 there would be a total of $7,500 available.
The extra could come in handy if the furnace or some other major appliance breaks.

Cash will be a real issue in this scenario. That $60,000 annual income looks big, but let's
take a look at where it goes. Taxes take about 20 percent or $10,000. Debt repayment
takes another $24,000. Housing consumes about $10,000 (including utilities). We're
down to $16,000 and still haven't considered food, medical, child care, transportation,
other miscellaneous expenses, or the down payment for the new home. We're talking
about a very tight budget here.

Whether you buy or rent in two years, you still need to get out from under that debt as
soon as possible. Once the debt is paid, that money can be redirected to saving for a down
payment or prepaying a mortgage.

It Helps To Have Cash

One final thought. You'll have friends tell you that by buying a home you're saving on
income taxes and building equity. And it's true - up to a point. But for every dollar that
you save in taxes you'll pay three or four in interest charges. And without prepayments,
you'll build very little equity in the first few years of home ownership unless inflation
With lease purchase, you structure it so you get a generous rent credit, which is applied to
the purchase price of the home.
Remember that owning a home opens you to unexpected big expenses. Building equity is
fine, but it won't help if the refrigerator dies and your budget is so tight that you don't
have the money to replace it.

The True Cost of Buying a House

When shopping for a house you will be told what the monthly house payment will be.
The payment will include the principal and interest, plus an escrow amount to pay for
property taxes and insurance. If you can qualify for the mortgage payment you may
decide that you can afford the house, and make an offer. Sound reasonable? Think again.

The true cost of owning a house depends on two factors: the cost of the house, including
principal, interest, taxes, and insurance; and the cost of living in the house. The cost of
living in the house includes utility payments plus maintenance and repair costs. These
maintenance costs must be calculated not only for the house itself, but for all other
structures on the property, such as a deck, fences, and storage buildings. Add to these the
cost of maintenance for appliances and equipment and you may realize that the cost of
living in the house may make unexpected budget demands. For an accurate budget
picture you should estimate the total cost of owning and operating the home.

When you lease purchase your home you are responsible for minor maintenance, any
major structural repairs are the seller's responsibility.

The age of the house can affect the cost of living in it. Houses that are less than 10 years
old are built to meet modern energy efficiency standards. Not only are the houses better
insulated, but the heating and cooling equipment also is more efficient and uses less fuel.
When house shopping, look for the energy efficiency rating (EER) labels on the
appliances. If the appliances lack EER labels, assume that the equipment is more than 10
years old, and both is less efficient and needs more frequent repairs than newer
equipment. Always ask the owner for annual heating and cooling bills so you will know
these costs.

Repair Costs
Now consider the maintenance and repair costs for the house itself. For example, asphalt
shingles have an average warranty of 25 years, with a maximum warranty of up to 35
years. If the house you are considering is 10 years old, the roof should last at least 15
years before replacement.

Next, consider the type of exterior siding. Brick or stone get the highest marks for
permanence and low maintenance. But many siding materials, including vinyl, aluminum,
and steel, have warranties of 25 years or more. Cleaners are available for these materials,
so you should enjoy a period of 25 years of freedom from exterior maintenance. If the
house siding must be painted, figure on having to repaint every five to seven years.
Estimate the cost of having the painting professionally done. For example, a $2,000
painting estimate divided by five years will add about $35 to the monthly cost of living in
the house.

When house hunting, you may be impressed by such amenities as a deck or privacy
fencing. Each additional structure contributes to the annual maintenance cost. Even
maintenance-free deck materials will periodically need a coat of water repellent; like
houses, fences must be stained or painted every five to seven years.
Consider the cost of living in the house. Shop for a quality house that offers low
maintenance. A proverb says that quality will be remembered after the price is forgotten,
and that is especially true when buying a house.

You should make a list of all the things you will need to consider when buying a home, so
that when you find your dream home you will be able to determine exactly what it's true
cost will be to you.

How Much House Can You Afford?

In recent years, the ease of obtaining a mortgage has produced a potentially serious
delinquency rate in mortgage repayments. Serious delinquency refers to mortgages that
are at least 90 days in arrears or are in foreclosure. The delinquency rate varies by loan
type, loan-to-value ratios, and geographic areas. However, it can be a financial tragedy
for those home buyers who cannot meet their mortgage payments. Experts were asked
how both the lender and the buyer can avoid the danger of a mortgage default.

Bankers agree that in general the smaller the down payment, the greater the risk of
delinquency. Industry figures show that in 1993 only 20 percent of all new home loans
had down payments of less than 20 percent, compared to the 41 percent of home loans
with less than 20 percent down payments in 1995. But many bankers believe that the
buyer should buy as much house as they can comfortably afford.

According to one mortgage banker, both the mortgage amount and long-term debt are
considered when qualifying a buyer. Long-term debt may include auto or installment
loans, or revolving charge cards with ongoing balances.

New financing falls within three main categories: FHA, VA, and conventional loans. For
conventional loans the rule of thumb is that the projected mortgage payment should equal
not more than 28 percent, and the mortgage payment plus long-term debt payments
should not exceed 36 percent of one's gross monthly income. For FHA mortgages, the
rule is that the mortgage payment should not exceed 29 percent, and that the mortgage
payment plus long-term debt payments should not total more than 41 percent of gross
monthly income.

Lenders first review the income and debt numbers and tell the buyer the on-paper
qualification amount. Then they ask the buyer how comfortable they are with the
maximum payment amount. The mortgage market has changed: for example, in the past
the husband was the sole breadwinner, but the family with two incomes may feel more
secure about their ability to make the payments if one or the other should lose a job.

Things change. The person who is a first-time buyer, or one who has not bought or sold a
home in the past few years, should sit down with a loan officer and learn the real estate
terminology and look at the actual numbers. Avoiding credit problems depends on how
well the buyer is controlling their credit. The mortgage payment may be the largest single
monthly payment, but all the consumer's spending decisions can contribute to their
becoming financially overextended. If monthly payments for the mortgage plus long-term
debt approaches 40 percent of gross monthly income, the person should be cautious and
avoid taking on additional debt.

With all the rules, regulations, and qualifications you have to meet, lenders make it
difficult. However, don't despair, this is where the Lease Purchase Advantage comes to
the rescue!

The Best Buying Advice

One young couple who was thrilled when they found a house in their price range five
blocks from the ocean. When the moving men arrived with the furniture, they were
horrified to find that their beautiful oak set was too big for the master bedroom. While
struggling to fit things in, they told themselves that summertime strolls on the boardwalk
would more than make up for the cramped space. But instead of relaxing moonlit walks,
they got rowdy summer tourists and broken beer bottles on their lawn. To make matters
worse, they discovered that their roof leaked - badly.

Unfortunately, nightmares like this occur more than you'd care to know.

Here's some tips to keep them from happening to you.

Make A Wish List

Before you even begin to look, make some lists.

First write down what you need and want in a house:

how many bedrooms (including the minimum sizes to fit your furniture) and bathrooms.

Do you need a large dining room for entertaining? A garage for storage? A den or office?

Is a fireplace a must? Do you want a big yard? Do you feel strongly about oil or gas heat?
How about well water vs. city water?

Next think about the location. Is it important to be near public transit or major highways,
recreation, shopping?

Do you want to live in a town with a "Main Street"? Are schools a consideration? List
everything you can think of. You won't get it all, but at least you'll be able to get as close
as you can to your ideal house.

Look, Look, Look

The more homes you look at, the better the chance you will find what you want.

This is why so many people love lease purchase. It allows you to find out all the
problems with a property before you buy.
Aging Choices
Two out of ten buyers choose new homes. New houses usually have more efficient
heating systems and better insulation and may be cheaper to maintain than older homes.
But you may get more space for the money and much more "character" with older homes,
which also are often made with better quality materials.

However, some older homes may have "knob and tube" wiring for electricity, which can
be unsafe and should be replaced. Older homes also may have galvanized pipes for
plumbing, which can rust and clog, and should also be updated. Along with new heating
systems, it is often wise to replace the drafty windows usually found in older homes.
Many older homes also have asbestos insulation around pipes, lead paint, and other
hazardous materials that should be removed. An experienced home inspector can help
determine the age of a home and tell you the pluses and minuses involved.

New Doesn't Mean Perfect

Contrary to popular belief, new homes are not supposed to be perfect. It is normal for
them to have growing and settling pains. But unprepared homeowners can become
frustrated when problems occur and they discover their builders and new home
warranties don't cover the repairs. On the other hand, some new home defects are a result
of substandard construction or materials, which can quickly turn a dream house into a
nightmare. Again, an experienced home inspector can save you a lot of headaches down
the road.

Put Yourself There

Many people buy a house based on two or three looks, then are surprised to hear a nearby
First Aid alarm go off a week after they move in. Visit the home and drive around the
neighborhood during different times of the day - early morning, commuter crunch time,
late at night. Ask to see the house during and after a heavy rain.

Ask, Ask, Ask

While some states require sellers to disclose particular information about a house, an
anxious seller may not always offer lots of information about the home or neighborhood.
But most will answer when asked a direct question. Find out what happens in the summer
in a beach town. How is the snow removal in the winter? Does the nearby lake flood in
heavy rains? Again, lease purchasing is a great way to find these type of things out before

Be Sure Before It's Too Late

Whether you're buying a new home or existing one, protect yourself with a professional
home inspection. Your contract should be contingent upon a satisfactory report by a home
inspector. Let an objective, experienced professional check the structure and all
mechanical systems. If the inspection reveals problems you may decide to cancel the
contract, request the owner fix the problems, or negotiate a lower price.
Wow, you say there is certainly a lot to be aware of. Yes there is, but it is much better to
know all of this ahead of time than after the fact. Don't worry, you'll find good investment
property that you can move to a tenant/buyer and do so quickly by following some of the
above hints.

It is for many of these reasons that lease purchasing is so appealing. Imagine being able
to discover hidden problems with a home or neighborhood before you purchase. Now
that's what we call peace of mind!

Now on to how to use lease purchasing.


Chapter 5
Finding the Property

Using the Newspaper and the Internet - Our Two Favorite Methods
The newspaper is your best tool for finding property. However, you also have additional
resources, such as the Internet. Also don't discount the small local papers, like the
Pennysaver, Real Estate Mart, etc. There may be many supplemental publications in your
area that you should look into for properties.

You want to start collecting newspapers. What we mean by this is to keep the Real Estate
sections of your newspaper. For most areas, the Sunday paper has the most extensive
listings. If this occurs during another day in your area, hold on to that day's newspaper.
We usually hold back newspapers that are 6 to 8 weeks old. Why, you ask? Well, if the
property is still available after that period of time, the seller is just a bit more motivated,
then if we call the day after it is listed.

The Internet is a great tool. It allows you to find properties in your local and surrounding
areas, and also around the country. For now, we will concentrate on your local and
surrounding areas. However, this same method will work for outside areas, if you do

Check Yahoo, Google, Excite, and other search engines for their Real Estate sections.
Since these sites vary on how their Real Estate sections are presented, and they also make
frequent changes to these sections, what you want to look for is the following. You want
to concentrate on Real Estate in your area, for example; Fresno, CA; Porterville, CA;
Clovis, CA; then you want to look at properties that are For Sale By Owner (FSBO's).
(Be aware that many Real Estate Agents will also post in the FSBO section). You want to
look for houses up to the $200,000 range (this may be higher in some areas, for instance
in some areas of CA bread and butter properties (3bd, 2ba) are priced in the $250,000
range), preferably 3bd 2 ba with at least 1 garage.
To save time, what we do is just write down the telephone number of the properties that
meet our parameters. You do want to skim the advertisement for any restrictions, or items
that might red flag the property to you as one you would not want to call on. For
example, we would not call a property that had only 1 bath, had a lot of homeowner
association restrictions, was in litigation with the association, had age limitations; or was
under 5 years old.

When looking through your newspaper advertisements, you would start with the homes
for sale section. Look for words such as owner motivated, willing to use creative
financing, OWC (owner will carry), foreclosure imminent, desperate, any terms, no or
low down, vacant, Lease Option, Lease Purchase, Rent To Own.

Also, the longer the ad, the better. Individuals who list everything about their home are a
lot more amenable, at least that is what we have found. These words indicate very
motivated people. They have a problem, and you have a solution for them if they are
willing to be flexible and creative with you.

Always start with the homes for sales section first (FSBOs), then the remaining ads, such
as townhouses, condos, or mobile homes. In particular, don't forget to call the "for rent"
section of the paper. Many times sellers will have ads in the for sale section and the for
rent section, since if it doesn't sell, rental is the next option so be sure to cross check.
Here, pay particular attention to long rental ads. Why? These are usually placed by
individuals who have a problem property. Professionals rarely use more than 2 or 3 lines
in their ads.

Other Publications
As mentioned earlier, don't forget to check out other publications in your area. Your local
Pennysaver, or small local papers in the surrounding communities, for sale by owner type
of magazines or newspapers, rental hotsheets, Help U Sell publications, or specialty
papers (churches, senior groups, etc.).

Another avenue to pursue is the Multiple Listing Service. In some areas you can become
an affiliate member of a Real Estate group and have access to the multiple listings. You
can also try working with a Real Estate agent and see if you can get access that way, or
just work with agents. Real Estate agents are invaluable for finding potential properties
that will go as a Lease Purchase. A good agent who understands the potential profits of
Lease Purchasing can really help in finding you motivated sellers. Be sure to pay
generous finders fees to real estate agents. If you use the MLS, you may want to
concentrate on expired or expiring listings.

Two other avenues are to drive your area or have friends and family on the look out for
vacant properties; and/or place an ad of your own in the local paper. For example: (I
Lease Purchase homes Quickly, call me anytime at 333-4444. Or, I can sell your home in
30 days or less with the Lease Purchase solution, 333-4444.)
Other ways to find properties are through public information, such as evictions, absentee
owners, homes with liens, homes with judgments, properties in default or pre-foreclosure,
homes behind in property taxes, etc.

Once you have gone through all of the options above you should have a number of
different ways to contact owners/sellers. Be sure to keep this information organized. You
will start with the newspaper, then proceed with the Internet information you have
gathered, from there you work down the line of options we have outlined.

Remember you want to have various marketing strategies for obtaining lease purchase
properties. By putting all these feelers out there and working diligently on a daily basis in
all areas, deals will start to come to you. The Anatomy Of The Deal will strictly focus on
the deal, not on the business end of Lease Purchasing. For a more in-depth treatise on
how to do this, check out our website and our "Lease Purchasing As a Home-Based
Business Manual" ( http://www.homebusinesssoluti/products/products.htm ), which will
show you how to get deals to come to you.

Now that you have gone through your newspapers and the Internet for your local area,
you are ready to start calling.

Chapter 6
Calling On The Properties

Calling on properties seems to be the hardest thing for most investors to do. It is also the
one area that many of our students try to short cut. Let us repeat, there is no short cut for
this area. Follow the script. If you do not follow the script you will lengthen the time
frame it takes for you to get the deal. And, you will not have all the information you need
before you go and see the property, which in some instances will be a waste of time. It
can also put you at risk.

Remember you need this information to do your research before you leave your office. In
doing your research you might find this deal is not for you. However, if you don't have
your questions answered, you can't do your due diligence, hence, no deal, no money, a
waste of time.

Don't waste your time, do it right the first time.

Get Ready to Call

Have your newspapers ready, your Internet list ready, the script with your list of questions
we are going to go over below, and a yellow legal pad with the following across the top:

telephone number, house/condo/townhouse; price; and a notes section (in this section, we
put down if we left a message and the date; a yes or no if they are interested in Lease
Purchasing; their address for sending information, a follow-up time to call or meet),
basically any notes we want to remember.
This information will be transferred into your appropriate database. Again, for a full
treatise on the Lease Purchase business, please see our "Lease Purchasing As a Home-
Based Business Manual" ( http://www.homebusinesssoluti/products/products.htm ).

Get a cup of your favorite beverage and start calling.

If someone answers, you say hello, my name is _____________, could you tell me if the
property is still available, if yes, continue, if no hang up.

If yes, who am I speaking with (if they have not identified themselves).

Are you the person I would speak to regarding the property?

Can you tell me a bit about the property?
Then let them speak.
While they are talking, fill in the following on your pre-qualifying sheet.

Home Information
Size and square footage of the home?
What is the layout (split, 2-story, ranch, etc.)?
How old is the home?
What about the lot size?
Does it have a garage?
How many rooms?
How many baths?
Are there any features that you consider special?
Are any furniture or appliances included?
Has anything recently been replaced?
It sounds like you have a nice home. I was wondering why you are selling?
While they are telling you about their home you should be filling in the information
above. You might have to ask specifically, how many square feet, the layout. One of the
best questions,

AFTER THEY STOP SPEAKING, "Are there any features that you consider special?".
Another is, "Has anything recently been replaced?" "Wow, it sounds like
a beautiful home, why are you selling?"

Again, let them talk. This question gives you a lot of information about their motivation,
time frame, sincerity and flexibility.

If, for example, they are moving into a larger home, we might say, Wow, that's great; or if
they are divorcing, I am sorry to hear that (sometimes they are not) we go with the
feelings we get from them, REMEMBER LET THEM TALK AND BE A GOOD
LISTENER. You will be surprised what you can pick up.

In any case, back to pre-qualifying. Wow, that's great, have you owned the property long?
Pricing Information
Have you owned this property long?
What price are you asking for your home?
By the way, how did you arrive at that price? Did you do comps for the area?

About how long has your home been for sale?

Have you had any offers on the property?
Why do you think the property hasn't sold?

Are you negotiable on the price?

We do not hesitate in this section.
We ask them how long they have owned the property, what price they are asking, how
they came up with that price, did anyone do comps, how long it has been for sale?
And are they negotiable on the price?

After we get this information we ask them, why do you think it hasn't sold.
This usually gives us a good indication of those things that sellers don't like to talk about,
electrical codes, additions they made that are not approved, smaller than average
bedrooms, older bathrooms and kitchens, landscaping oddities, etc.

Next, we ask about Financing Information

Can you tell me about the existing financing?

What existing mortgages or financing is on the property now?

Are there any second mortgages or home equity loans on the property?

What are the terms: interest rate, monthly payments?

Is it assumable?
What did you originally pay for the house?

If you don't mind my asking, are the payments current?

Is there any pending or existing litigation on the property?

Are there any specific CC&Rs (covenants, conditions and rules), on the property?

We don't mess around in this area. We come right to the point.

What kind of financing is on the property, what are the mortgage payments, second
mortgage, home equity loans, terms, monthly payments, is it assumable? Remember, this
area is very important to you. It will be the deciding factor on whether there is a deal here
for you or not. Tell the seller that you are an lp consultant and that you are looking for the
best way to buy their home at the asking price.
We also ask what they originally paid for the house? We have only had a couple of
owners say it is none of our business, and we've said, "Well yes, it is. We can find out on
the Internet when we check to see if you are the owner of record."

People who don't like to answer financing questions or start playing games are very
abruptly cut off. This is an important area. We want to be sure we are speaking with the
owner of record, that the home is what they say, that they are not behind in payments, and
that everything is on the up and up.

After we have all this information, we then ask the seller if they would be interested in
doing a Lease Purchase. We tell them we can get them the top price for their property.
That we can save them on closing costs, and place someone in their home that will pay
them non-refundable option money. This individual is responsible for all maintenance
and repairs, will pay them on or before the 1st of the month, and that we can do this in 30
days or less.

After we have said this, we pause and wait for their answer. We sometimes get a No, I
need to sell it. At that point we say OK, why don't we send you some information on
lease purchasing so you have another option available, just in case you need it.

If we get a Yes, tell me more. We explain the lease purchase advantages for the seller and
the tenant/buyer. The advantages mentioned earlier are important. Be sure you know
them by heart. After explaining the advantages we tell he/she how the co-operative
strategy works.

What we mean is, we explain to the seller this is how we work with you. You receive the
positive cash flow and we keep the assignment fee.

If they do need some money up front, which they usually have told you already, we then
say, we will split the assignment fee, and we will split the positive cash flow.

There are three ways we work with sellers: 1) The seller receives the positive cash flow
and we get the assignment fee; 2) We split the cash flow and the assignment fee; or 3)
The seller pays us a $500 non-refundable consultation fee, and they receive all the
positive cash flow and we split the assignment fee. We explain the third option by telling
the seller, since we will have time and effort into the property and you want to keep all
the positive cash flow and you want half of the assignment fee, we want to be
compensated for our time, knowledge and energy we will have put into the property. We
will credit it to the assignment fee when we assign the property. This is for our protection.
Since we are making less profit, with the same risk, we want to be sure our expenses are
covered in case the property doesn't move or the seller turns out to be unreasonable.
We then tell the seller, we need to check out the property, comps in the area, and to put
together the Lease Purchase numbers, for example (what you would ask for the house, the
positive cash flow the seller would receive, whether you will receive a percentage of the
cash flow, how you will work with the seller.) After we have done this, we will call you
with the particulars. This is the time you want to outline how much assignment fee you
will ask for, if you need to split it with the seller, and what terms you need. Then you call
to set up a time to meet, and to see the property. We will bring a contract with us so we
can get started. Also, be sure at this time to have all parties there that are on the mortgage.
Is that agreeable with you? Set up your appointment and you are on your way.

Remember, check out the property on the Internet or at the county clerks' office, if your
county is not on line yet. Be sure they are the owner of record, that they are current with
payments, and there is no litigation involved. You can find this out by checking the
county records. Do your homework, check out what rentals are going for in that area.
Have all your figures done, before you meet, don't do them on the fly with the seller
sitting there. You want to be sure the assignment fee and rent credit are accounted for.
What we mean is be sure you can put them in the price of the property without making
the price too high. It has to be win-win for all parties. If not, the deal is not for you. You
can have another set of options available if the owner doesn't like the original offer, but
usually, we find, they accept the numbers we give them. However, we make sure they
receive good positive cash flow and a good price for their home.

For most co-operative strategies we ball park the sales price by checking what similar
properties in the area are listed for. Most buyers are used to looking in the paper, so if the
price is comparable, they are more comfortable. Keep in mind, if the seller's price is out
of line, you can use other methods to price the property such as comparable sales, square
footage, etc.
Now you are ready to meet with the seller.


Chapter 7
Meeting With The Seller
Remember to go over your negotiating skills and strategies. We cover this area more fully
in our manual and tape sets. Click For additional information on Lease Purchasing
(http://www.homebusinesssoluti/products/products.htm) and/or Home Based Businesses
Know what you want. You can't get what you want from others if you don't know what
you want for yourself. Establish a specific goal for negotiation. Consider what it will take
to satisfy your interests, needs and objectives. For example, I need a $5000 assignment

Develop a plan. Once you know what you want, establish a negotiating strategy to
achieve your objectives. Before presenting your first offer, consider where you want to
start and where you want to finish. Give yourself some room in which to move. Tell the
seller the ways in which you can work with him.

Know what the other party needs. It takes two to negotiate. To reach an agreement, all
parties must feel that some, if not all, of their interests have been satisfied. The person
you are negotiating with has motivations and concerns. Remember to ask open-ended
questions to gather information and understand their position. You are getting this
information when you are asking the seller questions about his home, and building a
rapport with him.

Be an empathic listener. Again, attentive listening is a powerful negotiating tool, which

enables us to understand the motivations of others. Listening carefully when the seller is
talking about his property is critical.

Attack the problem, not the people. Focus on finding solutions to your shared problems.
Screaming at someone may let off steam, but isn't conducive to effective joint problem
solving. Be courteous and tactful. Give the seller various options of how to work with
you, and remember, if lease purchasing is not an option now, it might be later.

Treat the other side as your ally, not your enemy. Your negotiating partner may have to
persuade others to agree to your deal. As your friend, this person can sell your deal. As
your enemy, he/she can sink it.

Remember, whether your seller is a husband or a wife, they might have to explain this
strategy to their spouse or significant other. Be clear as to how your process works.
Educate, don't intimidate. Be prepared to explain, document and justify to your
negotiating partners why they would be well-advised to accept your proposal. Help them
understand your position. Explain how the lease purchase advantage works for the seller,
how it allows you to move the property quickly, gets a qualified tenant/buyer in his home
rather than a renter, and how you will be there for them throughout the process.

Be patient. Don't be angry or insulted if the first offer you receive is not what you hoped
it would be. Treat the proposal as the first of several in the negotiating process. Slow but
steady movement creates momentum, which can lead to agreement. While a seller who
has just put his property up for sale might not be interested in a lease purchase, that same
seller might be very interested two months down the road, either in doing a lease
purchase with you or consulting with you. We can't count the number of times this has
happened to us. We have contacted a seller, he/she is adamant about selling and in three
to six months we get a call from them for help.

Consider the consequences of no agreement. Think about what could happen both good
and bad if you are unable to agree. Can you afford to "walk away" from the table, or are
you desperate to make a deal now? Rather than work with a seller who is going to give
you problems throughout the process, better that you found this out now. Don't waste any
more time, walk away and move on to the next deal.

Be flexible and creative. Always have a fall back position - some alternative that satisfies
you and the other party which allows you to make a deal. Again, in lease purchasing the
more time that passes where a seller can't move their property, the better for you. You
have time, lease purchase strategies, and consultations on your side.
Face To Face
When you meet with the seller, be sure to have your notes, your contracts (two copies);
addendum's (2 copies); assignment forms (2 copies); brochure and business cards. The
seller signs the contracts, the assignment forms and any addendum's during this meeting.
Again, make sure everyone who needs to sign is at the meeting. Be sure to be prompt.
Before you sit down to go over the contract, you want to take a look at the home. You
want to be sure that it is exactly what the owner said.

If there is one thing you will learn about people and their homes, is that is blind...
people see their home in the best possible light. They never see the bad points, only
potential buyers do.

What this means to you is that you have to be able to nicely, and I mean nicely, point out
some of the problems if you need to. Don't make a list of all the bad points and start
telling the homeowner all that is wrong. For example, if a 3 bedroom 2 bath home has
limited closet space, I will say, oh, good this bedroom allows for a storage cabinet, if they
need additional closet space. Another example, if a bedroom is very small or awkward for
furniture arrangement, I would say, this might make a good office, since it would be
difficult to get a full bedroom set in this room with the window and wall placement. All
of these things are going to effect how long it takes to move the property, so you have to
be able to discuss these things with the seller, but in a positive way.

Be sure to check out the home thoroughly and if things need to be fixed, cleaned, painted,
put these items in an addendum to be performed by seller before the tenant/buyer moves
in. Also be sure to get the key so that you can show the property. If the owner is still in
the property, still get a key, so that you can show the property when the owner is working,
or not available. In fact, we much rather show a property when the seller is not there.

Sometimes, after looking at a home you find that it is no where near what the owner said
it was and you know in your heart that this place is not going to move in thirty days, with
the numbers you figured, or your profit will be next to nil. In that case, tell the owner,
again politely, that based on what he/she told you, the figures you came up with are not
going to work, you need to re-work the figures and that you will have to get back to
him/her. Leave your card and brochure and tell them you will call them later in the day or
the next (whatever your schedule will allow).

When you do call, tell them that with the new numbers you worked out it would be in
their best interests if you consulted with them. If they say no, say fine, you have my card
and brochure, if I can help you at a later date, please contact me. Then be sure to send a
nice letter following up on your visit and phone call regarding the consultation.

If the property is all that the owner said, sit down with them and go over the paperwork,
your contract, your assignment form, make any changes to the contract on the addendum,
and have them sign all of these forms at this time. Be sure they understand how you are
going to split the moneys. If you are keeping the full assignment fee, and they are getting
the positive cash flow, say so. If you are splitting the assignment fee, and the positive
cash flow, say so. In essence, be sure they understand how the moneys will be split.

Tell them you will begin your unique marketing strategy to move their property. One
thing you want to do before you leave is to put up your Rent To Own sign on the garage
door, or on a tree in the yard if there is one, or on a wooden stick that you can place in the
ground. Be sure to also place these signs on major cross streets around the neighborhood.
Do this and you might find, like we did, by the time you get back to your office, you
already have messages on your machine.

Your Rent To Own signs can be purchased at any hardware store, or Target, or K-Mart.
They say House for Rent, you just add on in black magic marker Lease Purchase, or Rent
To Own, 3 bd 2 ba (whatever the size of the property is), with your telephone number. By
putting up the signs before you leave you give yourself a jump start in addition to saving
yourself another trip back to the area to put up signs.

Remember, time management is an important concept in running your business and

getting all that needs to be done completed. Again, The Anatomy of the Deal concentrates
on the deal process, for time management and organizational strategies, please refer to
our manual "Lease Purchasing As A Home-Based Business"


Next up is using your unique marketing strategies.


Chapter 8
Advertising the Property
Once you get back to the office you will make the appropriate changes to the contract and
addendum and send them to the seller. (A sample of this letter, and verbiage is contained
in our "Lease Purchasing As A Home-Based Business Manual"(

You will now begin your marketing strategies. Your signs are up, make up your flyer and
get those posted in the surrounding apartments, major cross streets, Laundromats,
supermarkets, etc. Call your local newspaper and place your ad in both the Houses for
Sale and Houses for Rent sections. Your ad should read, Rent to Own (try to get this
bolded) 3bd 2 ba, pool, spa, $1000 mo., Generous Rent Credit (or you can put 50% rent
credit). However, we have found that some people think the rent is only half of $1000,
and we have had various other questions come up that did not apply. So we have found
over time, that to make the screening easier, and to avoid callers that don't have any
interest in Lease Purchasing or Renting to Own, that putting "generous rent credit" allows
us to explain very clearly what it is and what is involved.
Depending upon the circulation of your local paper, and how quickly you want to move
the property, you might also want to place ads in supplemental publications.

Next, you want to have extra flyers handy for the property to give to prospective
tenant/buyers when you show them the property. It also helps to refer to your flyer when
you get a call on the property, especially if you are working multiple properties at the
same time. Remember, you don't just want to do one property at a time. Again, by
keeping your information organized, you will save yourself a lot of time and energy, plus
avoid costly mistakes.

Dealing With Tenant/Buyers and Credit Checks

When you do get a call, ask which property they are calling on, where did they see the ad,
the flyer or the sign.

We get the following preliminary tenant/buyer information: name, address, city, state, zip;
home telephone; what they are looking for; area; time frame; monthly payment; available
down; employment; work telephone; (# of) adults, children, and pets; and a notes section
(for example, what their credit is, reason for late pays or bad credit, any bankruptcies,
Qualify your tenant/buyer. Are they able to pay the rent on or before the first of the
month. This is a stringent requirement. If you pay on time, you get the rent credit. Is this
a problem for you? If they answer anything but no, stop and tell them sorry, but you
cannot help them. And no, I don't even want to try for a consult with this type of person,
because they are Trouble with a capital T, take our word for it.

Next qualifier is that they must be able to do minor repairs, structural problems are the
home owners responsibility.

Third requirement is option consideration. What would their budget allow them to put
down as option money towards this home. If they play games with you, tell them it is 2-
1/2% to 5% as a minimum on the property, be sure to cover all your out of pocket
expenses and add a profit. Or many times we just say, "the option money for this property
is $5000, or $3000", whatever we are asking for that particular property. Obviously, we
can work with them by taking back a note, however, they would have to have a minimum
of half the option money.

Next, send them to look at the property. Tell them if they like it they will have to fill out a
credit application and what the cost is for that. If you accept credit cards, tell them they
can do it by telephone or by fax.

Let's say they drive out to the property, love it, call you and ask to see the inside. We try
to get the credit application done before we drive out to show the property. Although
sometimes, we have shown the property without first having it completed, however, in
that case, we have scheduled multiple people to view the property. We tell all callers, if
they like the property, they should have a check or cash on hand to complete the credit
application, and if they want to hold the property they must leave a deposit.
For a deposit we ask for 10% to 20% of the assignment fee, and this is non-refundable.
The reason it is non-refundable is because once we receive a deposit, the property goes
off the market. Obviously, if they are turned down for the property, they get their deposit
back. If someone does give us a deposit we complete a Finance Summary form (a receipt
for the deposit). The finance summary form has the property address, the individual(s)
name and phone; what the deposit is for (consultation, option money, first month's rent,
credit check, etc.) our verbiage that certain deposits are non-refundable, and signature

You want to be sure you get the following information for the credit check.

Social Security Number, Date of Birth, Driver's License Number, present address, city,
state, zip, telephone numbers (home, work, cellular, pager) and the best time to call. You
also need employer/name of company, position, date of employment, annual income,
spouse's name, spouse's social security number, spouse's date of birth, spouse's employer
and annual income. How long at the present address?, landlord's name, landlord's
telephone, previous address and how long there, again the landlord there and the
landlord's telephone number.

We also have a section on here for Type of Home/Features Desired: Single Family,
Townhouse, Condo, Bedrooms, Bathrooms and Square footage. (This is for your database
Next we have Preferred Areas (List In Order of Your Preference) (This is for your
database information)

Date Able to Move In; How Long Have You Been Looking; Number of Adults, Number
of Children; and Pet & Type.

What is the maximum monthly rent you could pay, while still remaining in your comfort
zone?; What is your present monthly rent? What is the most option consideration you are
prepared to pay? (This is for your database information)

Additional Amenities:
Pool, spa, air conditioning, yard, number of car garage, storage, central location, tennis,
golf, other. (This is for your database information)

Next section is for Financial Information

Do you have any credit problems?

Have You Ever Filed a Petition for Bankruptcy? If so, when?
Have You Ever Been Evicted From A Tenancy? If so, when?
Have You Ever Willfully and Intentionally Refused to Pay Any Rent When Due? If so,
What is your present credit rating? Excellent; Good; Fair; Poor; Unsure
Credit References; Limit; Balance
Monthly Obligations
Auto Payments; Rent; Utilities; Telephone; Insurance, Credit Cards; Child Support;
Alimony; Mortgages; Loans; Other
Additional Notes
At the end put in the following disclaimer:

"I declare that the foregoing information is true and correct. I authorize its verification
and the obtaining of consumer credit report.
All information contained is strictly confidential and is for the sole purpose of
determining how our program would best be suited for your present financial needs and
future goals."
Next, the signature of applicant(s) and the date.

As you will notice some information is for your database only, it is not needed for a credit
check. Remember you want to get as much information as you can from your
tenant/buyers, since you can only put one couple or individual in a home. The more
information you have on prospective tenant/buyers the better able you are to help them
find a property. You might receive 20 to 30 calls from people interested in the same type
of property you are working with. You want to be able to contact these people to see if
they are interested in subsequent properties you obtain.

The preliminary tenant/buyer form and the credit check form and all of the other forms
we use on a daily basis in our business are in our
"Lease Purchasing As A Home-Based Business Manual"

This gives you the information you need to process a credit report and a good basis to
compare what a caller told you by telephone and what they say on their application.
When the telephone information and the written application differs it should set off
alarms for you. Check this person out very carefully.

We are very up front with our tenant/buyers. Don't lie to us, because we will find out and
if we do, we will not do business with you - ever! We will delete you from our database.

Once you have the application completed, call for the credit check. You will need to give
the credit checking company the full name, current address, social security number and
date of birth. You can find companies that do credit checks in your local telephone book.

You need to be sure to call the last two landlords and check on their payment record. Be
aware you may have to fax this signed form to a landlord or employer to indicate you
have authorization to receive this information.

Next call for employment verification.

If the credit check meets with your approval, landlord and employment are verified to
your satisfaction, call the seller and tell them you have a tenant/buyer for their property.
If they want to see the credit check we send it to them, however, we deal with the seller
as if it is a foregone conclusion that this tenant/buyer is fine, and we are going to call the
tenant/buyer and set up a time for them to sign off on the contracts. Be sure to tell the
tenant/buyer to bring certified funds for the assignment fee and for the first month's rent.

When we meet with the tenant/buyer we provide the tenant/buyer with the original of the
contracts. We keep the copy of the contract. They also receive a copy of the assignment
form, we keep the original. If there is an addendum, they get the original, we keep the

Using Third Party Payees

We always use a third party payee when we are getting a portion of the positive cash
flow. This is usually done by an escrow company, although there are independent
businesses that offer this service. These are sometimes called collection accounts. This
type of account will cost you a set up fee and a small monthly payment. We believe it is a
very small expense for a lot of peace of mind. The tenant/buyer mails the monthly
payment to the third party, they in turn pay the mortgage, taxes, etc. and forward any
balance to the seller and you. We always use a third party payee in any sandwich deals we
do. In addition, we recommend a third party payee to the seller and tenant/buyer even
when we are not getting a portion of the positive cash flow. It is an added protection for
all parties.


Chapter 9
Finalizing The Deal
You've received the credit check back on your tenant/buyer. His/her employment checks
out, past two landlord's check out. Credit history is fair. Next you want to call the seller
and tell him/her that you have a tenant/buyer for their property. You are going to schedule
a time to meet with them to sign over the paperwork, and get the assignment fee and first
months rent. You tell the seller once that is done you will mail his/her portion of the
assignment fee, if applicable, and first months rent to him along with his final letter that
contains all the pertinent information on the tenant/buyer.
Wait you say, the seller starts to ask about the credit check, employment and past rent
payment history. Fine, tell the seller what he/she wants to know. If they insist on a copy
of the report, send it, either by fax or mail. However, reinforce the positives of the
tenant/buyer with the seller, that you feel these individuals are perfect for your home, and
they are ready to go. That you want to set up a time to meet with them so you can assign
the property, and they can inform their current landlord of their move, etc. So as soon as
you can please get back to me with your decision.

Honestly, we have only had a couple of sellers want to see the credit report, and only one
went so far as to wanting written confirmation (in addition to verbal) for payment record.
In most cases, the seller is relying on your judgment for the tenant/buyer. If he/she didn't
trust your judgment, why are they doing business with you. Adopt this type of attitude
and you'll have few problems with sellers.
Next, set up a time to meet with the tenant/buyer(s). Bring the contract, assignment form,
any addendum(s), and the key if the property is vacant. Be sure to inform the
tenant/buyer to have certified funds for the assignment fee and the first months rent. If the
tenant/buyer does not bring certified funds, they do not receive the key until we cash the
assignment fee at their bank. If the seller is still in the property, the tenant/buyer gets the
key from the seller upon departure from the premises. The tenant/buyer receives a copy
of the assignment fee, the original of the contract, and a copy of any addendum(s). If
certified funds are not used, all paperwork (contracts, addendum's, assignment form) are
held until the check is cashed. The tenant/buyer receives a copy of the Finance Summary
Form for their records, and is told the other paperwork will be mailed.

The final item is to mail out final letters to the tenant/buyer and the seller. The final letter
to the seller includes the completed assignment form, any addendum(s), his/her first
months rent along with tenant/buyer's name, address, phone. If the assignment fee is
being split, a check for their portion of the assignment fee. The final letter to the
tenant/buyer should include a copy of the assignment form, where the rent check should
be mailed to (if not delineated in the contract), seller name, address and telephone. Be
sure your final letter to the buyer and seller asks for a testimonial.

You're done, you're out of the deal with a nice assignment fee in your bank account, and
if you negotiated it, some positive cash flow coming to you each month.

Some Deal Numbers

The following are some deal numbers we have negotiated using the co-operative strategy.
For some we split the assignment fee, for others we did not. For some we received half of
the positive cash flow, for others we did not. However, all of the following deal numbers
are using the co-operative strategy only. For the majority, the rent credit and assignment
fee were added to the price of the property. This helps a great deal when negotiating with
the seller. However, as mentioned earlier, be sure this does not make the price too high. It
has to be win-win for all parties.

The property was a single family, with 4 bedrooms, a loft, 3 bathrooms. It was 2400
square feet. Some of the amenities were a pool, spa and a good sized yard. The rent was
$1550 per month. We offered a rent credit of $400 per month for the first year only. The
owner received positive cash flow of $75 per month (This is low positive cash flow.
However, this seller was making two payments. This property was vacant. He had it with
a Realtor for over 6 months and was also trying to sell it on his own. He knew the
payment was high, and was ecstatic to get even $75). We negotiated for a $5000
assignment fee, no split. The term was 3 years, and the strike price for the property was

The property was a single family, with 3 bedrooms, and 2 bathrooms. It was 1650 square
feet, and had a small yard. The rent was $1225 per month. We offered a rent credit of
$500 per month for the first year only. The owner received positive cash flow of $225 per
We negotiated for a $6000 assignment fee with a note taken back for $3000. The term
was 2 years, and the strike price for the property was $167,000.
The property was a townhouse, with 3 bedrooms, and 2 bathrooms. It was 1100 square
feet with no yard. The rent was $950 per month. We offered a rent credit of $600 per
month for the first year only. The owner received positive cash flow of $175 per month.
We negotiated for a $2500 assignment fee. The term was 2 years, and the strike price for
the property was $108,000.

The property was a single family, with 3 bedrooms, 2 bathrooms. It was 1460 square feet,
with a medium-sized yard. The rent was $1150 per month. We offered a rent credit of
$600 per month for the first year only. The owner received positive cash flow of $300 per
month, and we received $300 per month. We negotiated for a $5000 assignment fee,
which was split. The term was 2 years, and the strike price for the property was $134,000.
No, the tenant/buyer was not taken for a rental ride. The owner had a small mortgage and
the rent was at market for this type of property. Sometimes you just get lucky.

The property was a single family, with 3 bedrooms, 2 bathrooms. It was 1500 square feet,
with a great back yard. The rent was $1175 per month. We offered a rent credit of $500
per month for the first year only. The owner received positive cash flow of $275 per
month. We negotiated for a $5000 assignment fee. The term was 2 years, with a right to
renew for $1500 per renewal, and the strike price for the property was $167,500.

The property was a single family, with 5 bedrooms, 4 bathrooms. It was 2800 square feet.
Some of the amenities were a pool, spa, landscaped yard. The rent was $1875 per month.
We offered a rent credit of $800 per month for the first year only. The owner received
positive cash flow of $187.50 per month, and we received $187.50 per month We
negotiated for a $6000 assignment fee, which was split. The term was 2 years, and the
strike price for the property was $224,000.


Chapter 10
The Proper Contract
Having The Proper Contract

In a lease purchase transaction, it is imperative that you use a contract strictly for that
purpose. Avoid the use of those standard or stationery store type generic contracts. A
generic contract is just that generic. By its very definition, a generic contract tries to be
all things to all situations and that is not possible. Using a generic contract is like going
into a clothing store and buying a one size fits all dress, suit, bathing suit, etc. Unless
you're very, very lucky, it's not going to fit in all the right places. When this happens, you
usually end up with your assets hanging out.

A good contract should cover the basics such as: the parties involved; the street and legal
address of the property; the terms of the agreement; rent; rent credit; sales price; length of
agreement, etc. A good lease purchase contracts goes a lot further. It will offer protections
for both the tenant/buyer and the seller.

A good lease purchase contract will offer protections to all parties involved in the
transaction. Some of the items that should be included are: a property inspection clause;
how serious building problems should be handled; rights to access and insurance
consideration. Additionally, a good contract should cover all the option to purchase
requirements. It should have an assignment clause and a right to cancel option clause.
The contract should cover how defaults are to be handled and have a section (addendum)
for adding anything else that the parties feel are important.

As you can see a good Lease Purchase contract covers a lot of ground. Generic contracts
rarely go into such specific areas. All of our copyrighted contracts come with our lease
purchase manuals.

You also want to Negotiate A Right of Assignment. This allows you or the tenant/buyer to
transfer interest in the lease purchase contract to another.

There are any number of reasons why you want to have the ability to transfer your
contract or position in that contract to another. Let's say part way through the contract
term you need to get out of the contract. If you just walk away, you could lose your
option money and any rent credits. Don't you think that these items have a monetary

Wouldn't it be nice to assign or sell your position in that contract and get your money
back. Or possibly even make a profit if the housing market has been strong and
appreciation has occurred.

None of us have a crystal ball. We can't foretell the future. Circumstances change,
financial situations arise, personal problems occur, wouldn't it be nice to be able to
protect your investment by selling or assigning your contract.

These are just some of the reasons why it's important to have the Right of Assignment in
your agreement. In fact, we'd almost go as far as saying no Right of Assignment, no deal.
You, of course, have to make that determination yourself. The contracts we use contain a
built in Right of Assignment.

Additional ways to protect yourself in a transaction are:

A Memorandum of Option.
This is a form filed with the County that shows your interest in the property. It will
typically show up in a Title search, thus putting a cloud on the title. You can also file your
entire agreement, but that is usually not necessary.

Using a third party payee. We discussed this earlier. You want to be sure the mortgage
and taxes are kept current. By using a third party payee you will receive an accounting
from the service or escrow company, so you can be on top of what is going on. It also
allows you to be aware of any problems and to handle them immediately.

Getting a title check performed on a property would not hurt. You want to be sure the
person selling has the right to do so and that there are no current liens on the property.
You may also want to see if the seller would be willing to split the cost with you or
provide a title insurance policy.

It is in the best interest of all parties to have the seller place the deed in escrow as quickly
as possible. This way if anything happens to the seller, you are protected in the
You want to establish a paper trail demonstrating the intent of all the parties in the
transaction if at all possible. So try to have escrow instructions done at the beginning of
the transaction.
If possible, have the seller add you to his insurance policy as a loss payee. Be sure the
tenant/buyer has renter's insurance.

The aforementioned are just some of the ways to protect your interest in the transaction.
It is important that you take all reasonable precautions to insure clean transfer of the
property when you decide to exercise your option to purchase.

The Pitfalls
The following are some of the obstacles or problems that came up in some of the initial
co-operative strategies we did, how we handled them and how we modified our approach
to the deal.
One of the deals we worked on, we thought we had 40 days to move the property. Well,
about 2-1/2 weeks into the deal the seller informed us that she was moving out early, and
she might have to rent the property if we don't move it within the next week. Well,
needless to say we were not happy. We already had ad expenses and time showing the
property into the deal. The deal went through, but we cut it close. We made sure
thereafter, that in our contract, if a seller rents or sells the property, we are compensated.
In fact, it is something we put not only in our contract, but in our Letter of Intent.

In this same deal, we took a post-dated check for a week later. Unfortunately, due to the
tenant/buyer having to deal with a securities firm, the check was not cashable for two
The lesson we learned is we should have asked how much can you give me today, in
addition to taking the post-dated check.

Don't let yourself get rushed. One of our deals moved so quickly, we felt rushed. The
tenant/buyer ran their own business, and every time we meet with them, there were
interruptions and we did not have their undivided attention. We made sure thereafter that
we set the pace, not the tenant/buyer or the seller. You need time to go through the
contract with the tenant/buyer, without interruptions. Now this deal worked out fine, but
we don't want a tenant/buyer coming back to us saying you didn't explain this well
enough. Well, we would have if we weren't interrupted every five minutes and had to do
it at your business. So now we meet at a quiet location and go over the contract with the
tenant/buyer. We don't have this problem with the seller as we usually meet at their home
and go through each item with them.

In one of our early deals we took back a note. Short term, 90 days. We did not have a lot
of knowledge about taking back notes, and none of the experts mention you should get
some money each week, bi-weekly, or monthly even on a short term note. So when
payment time came, the tenant/buyer informed us they couldn't pay the note on time, and
needed another month. Well, we did work it out. We got paid each week for three weeks,
then a balloon payment. The lesson here is no matter how short term the note, get paid
weekly, bi-weekly or monthly, but don't just balloon it a couple of months out.

Another thing that cropped up in this deal with the note, when the tenant/buyer signed the
contract and paid half of the assignment fee, they expected to get the key two weeks
before their lease period started. Now we know we told them a couple of times while they
were looking at the house and deciding, that they would get the key when their lease
period started or maybe a couple of days earlier from the owner. However, they expected
to get the key when they signed the contract. The lesson here is be sure to reiterate the
procedure when they say they would like the property and again when they sign the

This early deal is the one that made us re-think positive cash flow. We split the option
money and the seller got positive cash flow of $300 per month. We have since changed
our policies of working with sellers. The seller gets all of the positive cash flow and we
get all the assignment fee. Or the seller gets half of the positive cash flow and we get half
of the positive cash flow and we also split the assignment fee. Getting half of the positive
cash flow is another steady cash stream for you.
One thing that cropped up over time is we found we were getting way too
accommodating to both the tenant/buyer and seller. Yes, we want to help people,
however, you need to stick to your guns - or business policy. If you start trying to
accommodate every wish of a buyer or seller you will go nuts, trust us - we know. In
addition, you lose some of your credibility. They start to think they can walk all over you.
So make up your policies of working with sellers and buyers and don't deviate, you can
bend a bit but don't stretch it so much it won't spring back.
One of our most enlightening deals was a condo we handled. It was early on and money
was still an issue with us. We found we were still so worried about money ourselves, we
let the tenant/buyer and seller get away with things we would not even contemplate now.
So, big lesson, better you go out and work a part time job for a bit, then take on a
problem property. You need to know when to say no and/or fold your tent and walk away.

One thing you never want to do is let the tenant/buyer and seller meet before the contracts
are all signed and you have your assignment fee. Remember, you are contracting with the
seller and then assigning the contract. There is no reason for these two parties to meet
early on. This only happened to us once. It has never again, and never will. If the
tenant/buyer and seller want to meet after all the paperwork is completed, fine. Many of
our sellers want to turn over the key and meet with the tenant/buyer then. That is fine,
since everything is signed, and we have been compensated. Many deals have been lost by
investors when tenant/buyers and sellers have met before the deal with the investor was
completed; and the investor was out of the deal because the tenant/buyer and seller made
one of their own.

In one deal we did, we were ready to meet with the tenant/buyer to get the contracts
signed and the balance of the assignment fee, when the sellers changed their mind, the
deal was off. As a consequence, we changed a variety of things. One, we added a clause
to our contract, that if they change their mind, sell, or rent, the contract reverts to a
consultation and our consultation fee of $1,000.00 is due and payable immediately.

In one of the early deals we did we had a tenant/buyer whose father was an attorney. This
was during our accommodating period, and the first time it had come up, so we gave him
the 10 days he wanted to have his father review the contract. In addition, we told him we
would refund the deposit if they found the contract objectionable. Stupid, stupid!
We would never do this today, and don't you. If someone wants an attorney to look at the
contract, fine. They have until the credit check is done, 2-3 days maximum to have it
looked at, and their deposit is not refundable since they are asking you to take this
property off the market to others who might come in and take it.
So, yes, they can have an attorney look at the contract, in fact, the contract states they
should. They are just not getting all the time in the world to do so. If that is not good
enough, go on to the next tenant/buyer.

We took on a deal where the seller's friend was a Realtor, and she had the house listed
with him. Well, since we already dealt with this before we had a weekly fee to be
reimbursed in our Letter of Intent, and our contract if the house was sold before we lease
purchased it.

We had a tenant/buyer for the property. This seller however, was madly in love with her
home, so she wanted not only verbal verification of rental payments but written also. We
usually only have to do verbal verification. We got a written one done and faxed them to
her. She verbally agreed to the tenant/buyers. We tried to set up a time for all of us to
meet, which was a chore in itself. The tenant/buyer's job took him in and out of town. We
finally set a meeting time up for all of us to meet and sign all the paperwork. Well
needless to say, the day before we were to meet, the seller sold the property for all cash.

Did she have a moral and ethical obligation to our deal, we think so, but she didn't. So
remember, its not a deal until everything is signed, sealed and delivered. We did get
reimbursed because of the clause in our contract. However, the tenant/buyer was livid.
This tenant/buyer also had a lawyer for a father. Part of the delay in moving along with
the process was due to the time frame he needed to have the contract looked at by his
father. He wasn't angry at us, but the seller. Of course, in this situation his deposit was

However, we tell tenant/buyers don't give notice until we sign all the paperwork. Lesson
learned, don't take a seller's verbal agreement to heart.
Lease Purchasing is a great business, however, like any business where you are dealing
with people, you have to stick to your policies, adjust them when necessary and realize
anything that involves big bucks has its pitfalls. Just be careful, and if necessary, take
some additional time to think through the entire deal, better to walk away then get stuck.


Chapter 11
In The Anatomy Of The Deal we broke down the co-operative deal for you step by step.
The following quick check list recaps the steps.

Cold call on properties.

Find property, do a drive by.
Pre-qualify interested seller, tell him/her the various ways you can work with them.
Negotiate terms of Lease Purchase - length of lease purchase, price of home, monthly
payment, rent credit, etc.
Meet with the seller to see inside, sign contract, sign assignment form, and get key.
Be sure to check out home thoroughly and if things need to be fixed, cleaned, painted, put
these items in an addendum to be performed by seller before tenant/buyer moves in.
Mail copy of contract to seller, along with any addendum's.
Place signs on cross streets. Place flyers in apartment complexes, Laundromats, bus
stops, employee bulletin boards.
Place ads in local paper in homes for sale and rent sections.
Place ads on Internet.
Get tenant/buyer preliminary information. Have them do drive by.
If interested have them call back and you will do a credit check.
Do a credit check, if OK, set up time to show tenant/buyer inside of property.
Tell tenant/buyer if he/she wants the property you will require a deposit (10% - 20% of
assignment fee).
Do up Finance Summary Form.
Give to tenant/buyer to sign and tell them upon seller approval you will need to set up
appointment for them to sign contract, assignment form, and pay assignment fee and 1st
month's rent. OR
Show the tenant/buyer the property and have them fill out the credit check form at same
time, get money for credit check and deposit if they want you to hold the property,
deposit is non-refundable unless seller disapproves them.
Use the Finance Summary Form, so they know exactly what's owed upon approval and
how the funds need to paid.
Get seller approval.
Set up time with tenant/buyers to have them sign contract, assignment form and pay
assignment fee and first months rent.
These should be certified funds.
Give the tenant/buyer the original of the contract.
If property is vacant, turn over the key (unless otherwise instructed by seller that he/she
wants to do this) or if funds are not certified, the key is not given until you get the
checked cashed. If seller is still in property, the tenant/buyer gets the key from the seller
upon departure from the premises.
Mail final letters to seller and tenant/buyer.

There it is, the co-operative strategy of Lease Purchasing.

It is a wonderful way to make money.

Lease purchasing is a wonderful way to become involved in Real Estate investing or

running your own lease purchasing business.
If you follow our examples, it is a win-win strategy for all parties concerned.
We can't emphasize enough the various income streams lease purchasing can provide

The Anatomy Of The Deal concentrates on the co-operative strategy, but as we discussed,
you have numerous ways to provide yourself with multiple income streams.
Look for our upcoming book on sandwich lease purchasing as part of our The Anatomy
Of The Deal series.
Another great lease purchase technique is consulting.
This strategy allows you to work with both sellers and tenant/buyers around the country.

We cover this topic in our Anatomy Of The Deal: Consulting Your Way To A Six Figure
Income In Creative Real Estate.
For more information visit our web site at:


Chapter 12
Final Thoughts On Lease Purchasing As A Business

In retrospect, Lease Purchasing has allowed us to live the life we have always wanted to.
It has allowed us to live our vacations, rather than taking them.
Creative Real Estate has always been acknowledged as the World's Greatest Wealth
Builder. How much wealth you build is dependent upon your motivation and what you
want out of life.
The niche of Lease Purchasing gives you the opportunity to control your life, and allows
you to live the life you want. Your needs are different from everyone else. Maybe you
just need an extra $10,000-$20,000 a year, so you only want to work in your spare time
or part time. Or maybe you want to make $50,000 to $75,000, or more per year. In that
case you can work Lease Purchasing on a full time basis.

As we said, Lease Purchasing allows you to meet your time and monetary needs. You just
have to decide how you want to use it.
The following articles will give you an idea of what kind of deals you can do, what you
can earn, and how you can help others while making a profit for yourself (one of the best
feelings in the world).

Enjoy them, and once you are finished, get ready and start on that first deal!

Don't procrastinate, get out and do the deal. You can do it. If you have any questions or
need help contact us.

And remember,
Who Makes It Happen, You Do!

We wish you the best,

Chuck & Sue DeFiore


How Do You Want To Spend The Rest Of Your Life?

Those who have the desire to work for themselves, or in effect run their own business, go
through numerous stages.

There's the "Do I want to lose the security of my job" stage. So many people still think
that their job is secure. Well — newsflash — no job is secure. You can be terminated at
any time. So working for someone else only gives you a "false sense of security," no real
security. The only real security you have for you and your family, if you have one, is
what you do. Owning your own business is one way of creating a secure future, for
yourself, and your family. This is the time to start thinking about running your own
business, when you are working, not when you've been fired.

The next stage after a job is lost is "Should I look for another job or try to start my own
business, and if I start my own business, what do I do". Again, it would have been better
to start your business while working, so that you had time to build your business and then
move out of your job into your own business. But, if you lose your job before that
happens, you can try and start your own business. However, I would suggest having some
kind of job, if only part-time, that you can put more hours in, if you have to.

The hardest part at this stage is the realization that no one but you cares about your job
loss and your financial problems. People might say they are sorry, but life goes on. In
fact, during this time, you often find out who your real friends are.

You need to take a long, critical look at yourself, decide where your strong and weak
points are, what are your interests, and what type of business do you want to operate.

Some steps that might help are:

1. Get an idea - assess your skills, interests, and experience. Is something missing in your
town? What products or services would make your life, and that of your friends', family's
and neighbors' easier?

2. Assess your needs - How much money do you want to make? What type of work do
you want to do? What type of lifestyle do you want?

3. Pick part-time or full-time. Do you have enough money to start full time? Could your
business work part time, or would it require your full time presence?

4. Define your niche, the narrower the better. Write a brief mission statement that
explains your niche. For example - co-operative lease purchasing for homeowners with
expired listings.

5. Do market research to make sure there's a need for your service/product.

The next stage is "There's so much to learn and do." Yes, there is, if you do something
you don't know about. However, why not start with something you are familiar with and
interested in. If you don't, be prepared for a lot of learning and research. However,
whether it is an area you are familiar with or new, education is crucial and ongoing. This
is what successful business people do. "The day you stop learning, is the first day you
start going out of business". You have to make a commitment. If you can't do this, then
stay in that 9 to 5 rut. Harsh, I know, but true.

Think about where you want to be in a year, five years, or ten years from now. Were the
choices you made the right ones? Don't be someone who says, twenty years from now, "If
only I had". As Apollo said in Rocky III, "There is no tomorrow". However, this requires
that you take responsibility for your situation, rather than blaming everyone and
everything else, and keep hoping that "something will happen" or "things will change",
they won't! You need to be the one who changes and accepts responsibility for yourself
and your family. You want you and your family to be happy. Think of what is best for you
and your family. With your own business, you are in control, not someone else.

To create this security and real worth, you have to do it yourself. You need to educate
yourself. You have to take hold of an opportunity when it presents itself. You have to
force yourself to change.

You need... "The ability to focus on a dream...and the determination to make it real."

Real Estate is acknowledged as the World's Greatest Wealth Builder. It is a fact that more
fortunes have been made through Real Estate investing then any other means. The truth
is, you can do this in your spare time, part time or full time. You don't need a lot of
money or good credit to accomplish your dream of a better life for you and your family.
The Creative Real Estate niche of Lease Purchasing can allow you to live your Dreams.
Don't short change yourself. Take charge of your life now! Make a commitment to earn
additional income through real estate - The World's Greatest Wealth Builder.
The last stage is to start today - since there is no tomorrow on your path to success.

Good luck and Remember, Who Makes It Happen, You Do!


How To Give Yourself A $20,000/Year Raise Without Asking Your Boss

Why without asking your boss?

Two reasons, one, he or she will most likely say no; and second, he or she will probably
have you committed for asking.
So what do you do. Give the raise to yourself.

Impossible you say. Chuck and Sue are crazy. Not at all. Here's how.

You know we love the Creative Real Estate niche of Lease Purchasing and you know we
believe it to be the perfect home-based business.

But, did you know you can use these same methods in your spare time to give yourself
that big raise.

Ask yourself, "What would I be willing to do to earn an extra $20,000 in a year".

The answer may surprise you. And no, you don't have to become a hit man (or woman) to
earn this.

You just have to be willing to take a look at Lease Purchasing.

Some background before you think we've completely lost it.

For every 100 calls Sue makes on For Sale By Owner property, she either speaks with or
leaves messages for about 60%.
That's about 60 people she puts the concept of Lease Purchasing in front of.

Out of that 60, approximately 10 will develop into true prospects.

From these 10, 2 or 3 will develop into property we are willing to take on.
The others may become consultations or manual sales.

(Please keep in mind, these numbers will vary a bit depending upon your particular area
and current market conditions).

Gee, you say, that sounds like a lot of work.

Not really.
Consider making those calls over a 3 month period.
That's the equivalent of a call per day.
Why a 3 month period. Because you're only looking to do one deal a quarter.

Next question.
How does this translate into a $20,000/yr. raise? Simple.

On a typical single family house, we look for a $5000 assignment fee on average.
Well, let's do the math.

4 x $5,000 = $20,000.

Yup, a $20,000 raise on 4 deals per year.

Is this realistic? Absolutely.

In fact, we may be conservative on that raise for you. You may well decide to do five or
six or more deals in a year.

All it takes is knowing how to structure your deals, having the proper contracts and a
willingness to want to give yourself a raise.

You're right. Chuck and Sue are crazy. Crazy like a fox.


What Can I Realistically Earn In A Lease Purchase Business?

If you're looking at Lease Purchasing as a business, you'll obviously want to earn much
more than the $20,000 per year in our "How To Give Yourself A $20,000/Year Raise
Without Asking Your Boss" article.

Let's review the numbers from that article:

For every 100 calls Sue makes on For Sale By Owner property, she either speaks with or
leaves messages for about 60%. That's about 60 people she puts the concept of Lease
Purchasing in front of.

Out of that 60, approximately 10 will develop into true prospects. From these 10, 2 or 3
will develop into property we are willing to take on. The others may become
consultations or manual sales.

(Please keep in mind, these numbers will vary a bit depending upon your particular area
and current market conditions).

Now let's condense these numbers for calls into a one month time frame.
What do you get?

The probability of two or three properties per month that you could do deals on. That
equates to $10,000 to $15,000 per month.
But let's be more conservative. Let's say you do one deal per month for a $5,000
assignment fee (which is what we look for in a typical single family home). Now you're
looking at an income of $60,000 per year ($5,000 multiplied by 12 months).

Right there, you've built a very good income. But now factor in the additional income
stream from consultations you can do on property out of your area, and you can
significantly add to that yearly total.

Keep in mind, we're only talking about one strategy here. Lease purchasing offers
multiple strategies for doing business.

Bottom line, very conservatively, a realistic first year income for those working their
business full time, is $50,000 to $75,000.

Your second year, as your referrals increase and you continue to grow your business, has
the potential to see you well into six figures.

Now do you understand why we say Lease Purchasing is the best business we have ever
owned and why we believe that it is the Perfect Home Based Business. Oh yes, full time
for us on deals and consulting is about 20 hours per week.


Time, Knowledge And Energy; What They Should Mean To You

Our time, knowledge and energy are our most valuable resources. We do not let anyone
waste them.

Time. You only have so much time in a day to earn money. Learn to put a dollar value on
that time. Don't let anyone squander your valuable time. We all meet people who love to
talk, we're guilty of this ourselves upon occasion. However, our time, and yours also, is
valuable, after a polite or not so polite period, inquire as to how this person is going to
compensate you for your time. If they don't want to or can't, cut the conversation off. We
know this sounds harsh, but this person is taking money out of your pocket. That said, we
don't mean you shouldn't donate your time to worthwhile charities or causes, we do. Just
be careful where you spend your time resource.

Knowledge. If you're like us, you've spent money and effort to acquire the knowledge
you're using in business. Don't give it away. Our knowledge has a specific dollar value.
Like us, you'll meet people who will want to pick your brains for free. Don't let them.
In our Lease Purchasing business, we are constantly talking with people who just have
one quick question. Right! We all know where that leads. Or someone will want one of
our contracts to use. Sorry, our knowledge was hard won, and it will cost you to get it.
Again, the question, how do you plan on compensating us for our knowledge.

Energy. We only have so much energy to use in a day. We try to schedule our high energy
activities for the morning, for us this works best. You may find you work better in the
Our typical day starts about 6-6:30 a.m. and we end up usually about 9 p.m. No, we are
not working all this time. We always try to have some down time during the day. We truly
love what we're doing, so honestly, the day still doesn't seen long enough at times.

We'll schedule consultations for the morning when we're fresh. We may prospect or visit
potential houses in the afternoon; and after dinner, we'll do letters, get mailings ready,
bookkeeping or paper work. There's a reason for this schedule, our energy is highest in
the morning, lowest in late afternoon. We look at our evening time as something we can
do without a lot of thought being necessary. Whatever we do, we guard our energy very

TKE. Your three most valuable resources. Use them wisely.


A Five Thousand Dollar Christmas Present

On December 18, we contacted a homeowner with a problem. The homeowner had been
trying to move his house for over eight months. They had been with a Realtor for six
months, however, they had only spoken to the Realtor twice. Once when they signed the
listing agreement and again one week before the listing ran out. Can you believe the
nerve of the Realtor, he did not show the house once in six months and wanted to know if
the homeowner wanted to re-sign with him.

The unfortunate homeowner then tried to sell it himself for two months with no luck. By
this time he was getting very desperate. His new home was finished, the old place was
vacant and he was making double payments. Folks, this was a homeowner with a
problem in capital letters.

We explained how we could solve his problem using the Lease Purchase Advantage.
Mind you, we're not talking a slum house here. This place was awesome; four bedrooms
plus loft area, three baths, 2400 square feet, upgrades, pool, spa and gazebo, and a decent
amount of land. This house was in a very desirable area of town and less than five years
Well, I guess we were convincing, because he faxed back our contract the night of the
18th. Keep in mind, we were very up front with the homeowner. We told him that in all
likelihood, nothing would happen until January.
We started utilizing our unique marketing methods immediately. We ran one of our
special rent to own ads. These ads are designed to elicit a quick response. Always give
good to exceptional value and you'll have more calls then you can handle. However, since
this was the holiday season, the telephone didn't quite ring off the hook. We did receive
enough qualified callers to be encouraged.

Then we got lucky. The first couple to look at the house on December 22nd loved it. We
did the credit check on them (always do a credit check) and signed over the paperwork on
December 24.

The homeowner was astounded. We had solved his problem in six days, and gotten him
some positive cash flow also. We were heroes to him.

We weren't really heroes, what we did can be done by anyone with the proper training in
the unique niche of Lease Purchasing. Lease Purchasing allows you to control good
property in good areas without the hassles of mortgages, taxes and maintenance.

We utilized a co-operative strategy for this property. A co-operative agreement is one

where the homeowner wants some say as to who goes into his home. This is just one of
many strategies available to us as Lease Purchase consultants.

For six days of our time, we made a five thousand dollar assignment fee for this property.
Not a bad hourly rate was it?


Sometimes Dreams Do Come True

We had originally contacted this seller from an ad she had run for a townhouse. It turned
out that she was a Realtor. Before we could come to terms on the townhouse, she rented
it. We figured no great loss, townhouses and condos are difficult to move in Las Vegas.

About two months later, we received a call from her. She had kept the information we
had mailed to her and had remembered our conversations. Hint, always follow up a
telephone conversation with a letter, brochure or business card. You'll be surprised how
often you will get a call from someone you've spoken to months or years earlier.

It turned out that she was getting married and moving out of state. She wanted us to
handle the lease purchasing of her current house. Before committing ourselves, we went
to look at the property. The neighborhood was blue collar and the curb appeal of the
house was OK, not great. Inside the layout was very nice with a good sized yard. This
type of property is not our first choice, but we felt we could move it in 30 days or less.

We started running our special lease purchase ads, along with our other unique marketing
methods. These got the phone ringing off the hook from interested tenant/buyers. We had
those interested do a drive by and showed the inside to a number of people with no
success. Other than the type of property, we also knew we were trying to move a house
that was a bit over market for the area. We compensated for that by getting a three year
period for the option to be exercised and giving a very generous rent credit.

Then the fun really started. Her moving date was advanced, so we had less time to work
with the property than we had planned on. We knew she may have to rent the house if a
tenant/buyer could not be found. One nice thing though, she was willing to compensate
us for our time, knowledge and energy if this fell through. We might not profit as much as
we would have, but we wouldn't be losing either. However, our goal was to get a good
tenant/buyer into the home, not break even. We take very seriously our obligation when
we contract for a property, had we not found a tenant/buyer we would have been

The moving truck was coming on Tuesday, the previous Sunday we ran what was to be
our last ad. We received three very positive telephone calls from the ad. A gentlemen
arranged to see the inside and liked it. We were going to meet on the Saturday before the
move. He had to go out of town, so we rescheduled the appointment for Monday, the day
before the truck was to arrive. However, Sunday the seller called to tell us the truck was
coming a day early, you guessed it, the day of the meeting.

Well, we did meet with the tenant/buyer on Monday, as the moving company was loading
the truck. Talk about cutting it close. While we were there a young lady also arrived to
see the house, she really loved it. It would have been perfect for her and her disabled
husband. We felt bad, we would have liked to have seen her get it, especially after she
said it would be like a dream for her to own a house like this.

The original tenant/buyer gave us a substantial non-refundable deposit, with the balance
due in four days, Friday. Considering we didn't have a strong feeling for this person, we
weren't surprised when Friday came and went without any word from him. We left
several messages for him without a return call.

The following Tuesday we called the young woman back to see if she was still interested.
You could hear her yell with joy. Obviously she was still interested. We made
arrangements for both she and her husband to see the house. They were in agreement
about loving it. We redid the paperwork and picked up the whole assignment fee while
we were there. We did have to take a post-dated check, but sometimes you have to follow
your gut. We had a very good feel about this couple.

From start to finish, it took us about five weeks to move this property, perhaps 15 hours
of our time totally. This is about three weeks longer than our average. We were
compensated to the tune of a $2500 assignment fee. However, keep in mind, this business
is not just about money. It's about helping people. Nothing can replace the feeling of
knowing you helped someone get into a home today that they can buy tomorrow. Like all
people who deal with the public, sometimes you have folks that you like more than
others. This couple was one of our favorites.
By the way, it seems as if the renter in the townhouse we had originally contacted the
seller about flaked out and disappeared. So it appears as if we will lease purchase the
townhouse after all.

It's funny how things work out.


How To Make Everybody Happy And Earn $250 Per Hour Doing It

One of the things we like best about being Lease Purchase consultants is that we get to
help people. It's a wonderful feeling being able to provide a win-win solution to people's
housing problems.

This deal is a perfect example of how the Lease Purchase Advantage can benefit both the
tenant/buyer and the landlord/seller.

This was a wonderful 3 bedroom, 2 bath house in a good area. It had been vacant for
about three months while the owner had it listed for sale. The Realtor had shown it a few
times, with no serious offers. We contacted the seller using one of our many specialized
prospecting methods and she agreed to meet with us.

We knew from the preliminary information we took, that she needed some up-front
money, so we brought a co-operative strategy contract to the meeting with us. After
discussing how the Lease Purchase Advantage could solve her problem, we agreed to a
split of the assignment fee and had the paperwork signed.

While this house was beautiful inside, the outside or curb appeal was ordinary. We
tailored our unique marketing methods towards getting people to want to see the inside.
We knew if we could them get through the front door they'd love it.

To this end, we used newspaper ads, signs, flyers and phone calls to our tenant/buyer
database. We had a number of people do drive bys, but no one wanted to see the inside.
This happens at times, so you just keep marketing and don't get discouraged. As we tell
the sellers, our goal is to assign the contract within 30 days.

As we headed into week two, we received a call from a nice couple. They had been
looking to buy for awhile, but they needed time to reduce their debt to income ratio.
Since we had negotiated a two year term with the seller, this house was ideal for them. As
we knew would happen, once they saw the inside, they loved it. They gave us a deposit
and filled out the credit application on the spot.

The only catch was the amount of money they had to work with initially. We had been
looking for $6,000 assignment fee, but they only had $3,000 immediately. They would
have the balance in 90 days. We agreed to take back a note for the balance at zero percent
interest if paid within 90 days.
This points out another wonderful aspect of this business. You can create wonderful cash
flow streams by taking back notes. As these streams build, you even out your own
income. It is very nice receiving checks in the mail each week.

While there wasn't a lot of money to be made on this deal up front, we received a good
note and had less than 10 hours of our time invested. Do the math, this works out to better
than $250 per hour. Not bad pay, and everybody wins.

The Lease Purchase Advantage is a wonderful home-based business that anyone can do
with the proper training, contracts and support.


How To Earn $2,500 In Two Hours

If all deals were this easy, everybody and we mean everybody would be trying to earn a
living in creative real estate. This transaction literally took two hours from start to finish.
Only through the specialized niche of Lease Purchasing can you earn this type of living
while having so much fun.

This was a seller who needed to move because of health problems. As such, they had to
have some up front money. We met with them for about an hour. While there, we
suggested that we just consult with them as this would give them more money than if we
did a co-operative split. They were reluctant, even though we told them that they didn't
need us in the middle of the deal.

Consulting is when we show a homeowner how to put together a lease purchase deal,
provide the proper forms, contracts and marketing methods. We have learned that not
every seller wants Chuck and Sue in the middle of the deal. Consulting is a wonderful
way to increase our cash flow and business in certain situations. We consult with sellers
all over the country.

Getting back to this deal, the house was a former award winning model. This place could
have moved itself. It was spectacular. This is why we said these folks could do it
themselves. We knew this would go quickly. Even we didn't guess just how quickly.

We ran one of our special ads. These ads are designed to draw a quick response. As it
turned out, the first call we received was from a nice, young couple with children. We
gave them the directions to the house with instructions to do a drive by. If they liked the
outside, arrangements would be made for them to see the inside.

Since this house was about a 40 minute drive one-way for us, we had arranged with the
homeowner for them to show the inside. You can do this if you're comfortable that the
seller will not try to cut a deal behind your back. We weren't worried about that in this
In doing the drive by, this couple had stopped in front of the house to admire it. As is
happened the seller came out, saw them and invited them in to see the rest of the house.
They liked it so much, they called us while they were looking at it.

We agreed to meet the following day to fill out the paperwork. We received a substantial
deposit, with the balance due one week before they moved in.

The homeowner was thrilled that their problem was solved. They have since referred two
of their friends to us. That's one of the nice aspects of Lease Purchasing as a business,
you not only get to earn a good living, but you get to help homeowners with problems
and tenant/buyers build dreams. If you provide good value to the various parties to the
transaction, you can end up with more referrals then you can handle.

Now we are the first to admit, we got lucky with this one. It's not everyday that you move
a property with only two hours of your time invested. However, we were not about to
turn down the $2500 we earned from the assignment fee. We'll take $1250 an hour any


Being A Tenant/Buyer Means You Never Have To Say You've Wasted Your Money
Lease Purchasing affords the tenant/buyer a wonderful opportunity to get into a home
today, that he or she can buy tomorrow. But what options are available at the end of the
contract? Fortunately, Lease Purchasing provides multiple options here also.

Imagine having lived in a nice house in a good neighborhood for a number of years. Now
comes decision time. Let's examine the options you have.

First, you can exercise the option and buy the house. You've already negotiated the terms
of the sale, so you know what you'll be paying for the property. But, you may also have
an option within this option. Let's say the housing market in your area has softened and
the home is worth less than when you contracted for it. Don't you think the seller may be
willing to re-negotiate the terms of the deal rather than get the house back. There's a good
chance he will. To re-cap, you can exercise the option or re-negotiate.

Your second choice is to not exercise the option. In this case, you've rented a nice house
for a number of years and had great terms for that length of time. Here comes another big
but, if you've had a good record of payments with the seller, and you would like to stay in
the house, possibly the seller would consider turning your contract into a straight rental.

A third option has the potential to be a profit maker for you, the tenant/buyer. The end of
the contract period is approaching and for whatever reason, you don't want to buy the
house. What do you do? Well, if the real estate market in your area has been strong, why
not sell the house and make a profit on the deal.
What you say, how can I sell a house I don't own? It's simple. You exercise what is called
a simultaneous close.

Remember, you have an option to buy this house at a set price, if it has appreciated over
the length of the contract, you can sell it to a third party for a price greater than your
option price. You pocket the difference. Instant profit!

Well, there you have it. Options, options, and options within options. As you can see,
Lease Purchasing provides the tenant/buyer with the flexibility to be a "smart renter". No
longer do you have to throw your monthly payment down a black hole. Make the best use
of your money, rather than letting your landlord use it for his new car payment.

Only the wonderful niche of Lease Purchasing can give you so many choices. Don't ya
just love it!


A Few More Examples Of Lease Purchase Property

We hope the photos throughout the book have given you a good idea of the type of
property you can look for to do Lease Purchase deals. As you can see, Lease Purchasing
can work with all types of property.
Just keep your eyes open, and get that deal going.

Good Luck,
Chuck & Sue


The Anatomy Of The Deal Series: The Co-Operative Strategy - How You Can Generate
Quick Cash Flow In The Creative Real Estate Niche Of Lease Purchasing
We'd Like Your Opinion
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Please help us make the next edition of "The Anatomy Of The Deal Series: The Co-
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To thank you for your help, you'll receive a Free electronic version of the next edition of
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As always, Sue and I wish you the best!
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Quick Reference Flow Charts, Sign And Flyer Examples

Network Partners Flow Chart

Network Partners

• Mortgage Brokers
• Accountants
• Financial Planners
• Real Estate Attorneys
• Real Estate Investors
• Family and Friends
• Local Store Owners
• Local Store Employees
• Insurance Agents
• Associations You Belong To
• On Line Networking

Lease Purchase Deal Steps Flow Chart

Basic Steps For A Lease Purchase Deal

• Find FSBOs On and Off Line

• Make Prospecting Calls
• Contract For Property
• Meet With Seller
• Market Property
• Find Tenant/Buyer
• Perform Credit Checks
• Inform Seller Deal Finished
• Assign Paperwork
• Mail Out Final Letters
• Deposit Your Profits

Finding Lease Purchase Property Flow Chart

Finding The Tenant/Buyer Flow Chart
Rent To Own Sign Example

To Own
3 BD, 2 BA
Call 123-1234

Flyer Example
Rent To Own
Summerlin Area

Award Winning Former Model

3 Bedrooms, 2.5 Baths, 1,450 square feet,
2 Car Garage, Landscaped Backyard with Malibu Lighting & Spa, Alarm & Intercom
Systems Complete with AM/FM Cassette, Appliances Included,
Fully Upgraded, Community Pool and RV Parking
Great Terms!
Take 2 Years To Buy!
$500.00 Rent Credit Per Month For 1st Year!
Rent $1,180.00 Per Month!
No Rent Increases For 2 Years!
Option Money Down $5,000.00,
Credited To Purchase Price!
Price Fixed For 2 Years Only $147,500!

For Details Call


Lease Purchase
Contracts And Forms

Telephone Prospecting Outline

1. Hello, may name is __________. Could you tell me if the property is still available?
2. Please tell me about the property.
A) Size and square footage of the home?
B) What is the layout (split, 2-story, ranch, etc.)?
C) How old is the home?
D) What about the lot size?
E) Does it have a garage?
F) How many rooms?
G) How many baths?
H) Are there any features that you consider special?
I) Are any furniture or appliances included?
J) Has anything recently been replaced?
K) It sounds like you have a nice home. I was wondering why you are selling?
3. Have you owned the property long?
A) What price are you asking for your home?
B) Would you mind telling me how you arrived at that price?
C) Do you know what the comps in the area are?
D) About how long has your home been for sale?
E) Have you had any offers on the property?
F) Why do you think the property hasn't sold?
4. Can you tell me about the existing financing.
A) What existing mortgages or financing is on the property now?
B) What are the terms: interest rate, monthly payments?
C) Is it assumable?
D) What did you originally pay for the house?
E) If you don't mind my asking, are the payments current?
F) Is there any pending or existing litigation on the property?
G) Are there any specific CC&Rs (covenants, conditions and rules), on the property?
(If the homeowner is hesitant to talk about the financing, tell him/her you are an investor
and that you are looking for the best way to buy his/her home at the asking price)
7. Would you be interested if I told you there was a way you could get the top sales price
in your market area, not have to pay realtor commissions, save on the closing costs, and
get a tenant who not only gives you a percentage of the purchase price up front in non-
refundable option money, but pays on time and takes care of the maintenance, and do all
this in possibly 30 days or less?

8. If yes, explain lease purchase programs: assignment, co-op, consulting, etc.

9. Go into lease purchase benefits (see benefit sheet).
10. Start exploring lease purchase terms the homeowner would be agreeable to.
11. (IF YES) Then if we can do all this for you, can we do business?
12. (IF YES) Set Appointment and say "I'll bring a contract with me so we can get
started, Is that agreeable with you?"

Lease Purchase Property Research Form

Contact Information
Home Phone ________________________________ Work Phone
Property Address
City _____________________________________ State ___________________ Zip
Owner's Address if different
A) Size and square footage of the home?
B) What is the layout (split, 2-story, ranch, etc.)?
C) How old is the home?
D) What about the lot size?
E) Does it have a garage?
F) How many rooms?
G) How many baths?
H) Are there any features that you consider special?
I) Are any furniture or appliances included?
J) Has anything recently been replaced?
K) It sounds like you have a nice home. I was wondering why you are selling?
Have you owned the property long?
A) What price are you asking for your home?
B) Would you mind telling me how you arrived at that price?
C) Do you know what the comps in the area are?
D) About how long has your home been for sale?
E) Have you had any offers on the property?
F) Why do you think the property hasn't sold?
G) Are you negotiable on the price?
A) What existing mortgages or financing is on the property now?
B) Are there any second mortgages or home equity loans on the property?
C) What are the terms: interest rate, monthly payments?
D) Is it assumable?
E) What did you originally pay for the house?
F) If you don't mind my asking, are the payments current?
G) Is there any pending or existing litigation on the property?

H) Are there any specific CC&Rs (covenants, conditions and rules), on the property?
Terms Seller is Offering
Monthly Payment Needed _________________________ Amount Down Needed
Monthly Amount Credited to Purchase ________________ Length of LP Term

Tenant/Buyer Evaluation Form

Application Fee __________
Date __________ SS# _______________ DOB __________
Driver's Lic # ____________
Name __________________________________________________________________
Present Address ________________________________________________________
City ___________________________ State ________________ Zip ________
Telephone Numbers:
Home _______________ Work ______________ Best Time To Call __________
Cellular ______________ Fax ________________ Pager __________________
Employer/Name Of Company ____________________________________________
Position _____________________ Date Of Employment ________________
Annual Income _____________________
Spouse's Name _________________________________________________________
Spouse's SS# ______________________________ DOB ___________________
Spouse's Employer ________________________________________________
Annual Income ___________
How Long At Present Address? _________ Landlord ___________________ Telephone
Previous Address? ______________________________________________________
How Long? ________ Landlord ________________ Telephone _________________
Type Of Home / Features Desired:
Single Family __________ Townhouse __________ Condo __________
Bedrooms __________ Bathrooms __________ Square Footage __________

Preferred Areas (List In Order Of Your Preference)

_______________ _______________ _______________ _______________
Date You Are Able To Move In _______________ How Long Have You Been Looking
__________________ Number Of Adults __________ Number Of Children __________
Pets & Type ___________________

What Is The Maximum Monthly Rent You Could Pay, While Still Remaining In Your
Comfort Zone? _____________
What Is Your Present Monthly Rent? __________________________
What Is The Most Option Consideration You Are Prepared To Pay?
Additional Amenities:
Pool _____ Spa _____ Air Conditioning _____ Yard _____ Number Of Car Garage
_____ Storage _____ Central Location _____ Tennis _____
Golf _____ Other _________________________
Financial Information:
Do You Have Any Credit Problems? ______________________________________
Have You Ever Filed A Petition For Bankruptcy? ____________________ If So, When
Have You Ever Been Evicted From An Tenancy? ____________________ If So, When
Have You Ever Willfully And Intentionally Refused To Pay Any Rent When Due? If So,
When _____________
What Is Your Present Credit Rating? Excellent _____ Good _____ Fair _____ Poor
_____ Unsure _____
Credit References Limit Balance
_______________________________ _______________ __________________
_______________________________ _______________ __________________
_______________________________ _______________ __________________
_______________________________ _______________ __________________
Monthly Obligations:
Auto Payments __________ Rent __________ Utilities _________ Telephone
__________ Insurance __________ Credit Cards __________ Child Support
__________ Alimony __________ Mortgages __________ Loans __________ Other

Additional Notes:
I declare that the foregoing information is true and correct. I authorize its verification and
the obtaining of consumer credit report.
All information contained is strictly confidential, and is for the sole purpose of
determining how our program would best be suited for your present financial needs and
future goals.
Signature of applicant ____________________________________________
Date ___________________
Signature of spouse _____________________________________________
Date ___________________

Finance Summary
PROPERTY ADDRESS:_________________________________________________
The following is a breakdown of money necessary to be paid by CASH, MONEY
ORDER, OR CERTIFIED BANK CHECK on the premises before taking occupancy:
CONSULTATION FEE $______________
FIRST MONTH'S RENT $______________
OPTION MONEY $______________
DEPOSIT $______________
CREDIT CHECK $______________
TOTAL MOVE-IN COST $______________
PAID TO DATE $______________
BALANCE DUE BEFORE MOVE-IN ====> ____________________________
___________________, 20 ____, FOR ANY REASON OTHER THAN THE
____________________________________ ______________________________
____________________________________ ______________________________
___________________________________ ______________________________

Assignment of Agreement
___________________________________ (hereinafter "Assignor"), the Buyer/Tenant
under an agreement dated ___________, 20___ (hereinafter "Agreement") by and
between Assignor and _______________________________________ (hereinafter
"Landlord/Seller"), hereby assigns all right, title and interest in said agreement
to________________________________________ (hereinafter "Assignee") for the sum
and consideration of $__________________ received by Assignor.
Consideration to be credited to purchase price upon exercise of option.

Assignee agrees to perform all covenants, conditions and obligations required by

Assignor under said Agreement and agrees to defend, indemnify and hold Assignor
harmless from any liability or obligation under said Agreement. Assignee further agrees
to hold Assignor harmless from any deficiency or defect in the legality or enforceability
of the terms of said agreement.
Dated this _____ day of _____________, 20_____
____________________________________ ______________________________
Assignor Assignee
____________________________________ ______________________________
Assignor Assignee
I hereby accept and approve the terms of this assignment and agree to hold Assignor
harmless from any further liability or obligation under our Agreement.
_______________________________________ _____________________________
Landlord/Seller Date
_______________________________________ ______________________________
Landlord/Seller Date

Residential Lease Purchase Agreement

This agreement dated ____________________________________________________ is
by and between LANDLORD/SELLER ___________________________________
AND TENANT/BUYER __________________________________________________
for the dwelling located at ________________________________________________
under the following terms and conditions:
1. Term: Tenant/Buyer agrees to lease this dwelling for a fixed term of _____________
months, beginning _____________________ and ending _________________.
Thereafter, this agreement shall become a month to month agreement ONLY if
Landlord/Seller accepts rent from Tenant/Buyer.
2. Rent: Rent for the premises is payable in monthly installments of
$_________________, to be paid on or before the first of the month for which rent is
due. Rent must be received on or before the first of the month to receive rent credit. There
is no grace period.
3. Late Fees: Rent may be mailed through the United States Postal Service at
Tenant/Buyer's risk. Any rents late or lost in the mail will be treated as if unpaid until
received by the Landlord/Seller. Tenant/Buyer further agrees to pay a late charge of
$___________, plus $__________ per day for each day the entire rent is not received by
the Landlord/Seller by the first of the month regardless of cause, including dishonored
checks, time being of the essence.
4. Returned Checks: An additional service charge of $___________ will be paid to the
Landlord/Seller for all dishonored checks, in such case, Landlord/Seller shall have the
right to demand cash or money orders on all future payments.
5. Deposits: Landlord/Seller acknowledges receipt of $____________________ as a
deposit to indemnify Landlord/Seller against damage to the property and for
Tenant/Buyer's fulfillment of the conditions of this agreement. Landlord/Seller may
withhold from these deposit(s) any reasonable sum necessary to cover Tenant/Buyer
defaults and/or damage.
6. Utilities/Services: Tenant/Buyer will be responsible for payment of all utilities,
garbage, water and sewerage charges, telephone, gas, association fees or other bills
incurred during the term of this lease.
7. Occupants and Use: Tenant/Buyer agrees to use said dwelling as living quarters only
for _____ adults and _______ children, namely:
_________________________________________. The property shall be used and is
designated as a residential dwelling.

Initials __________

8. Peace and Quiet and Lawful Use: All radios, television sets, phonographs, stereos, etc.,
must be kept to a level of sound that does not annoy, or interfere with neighbors.
Tenant/Buyer shall be responsible and liable for the conduct of his or her guests.
Tenant/Buyer agrees they will not engage in any illegal activities on the property, and will
try to keep their guests from doing so.
9. Pets: Tenant/Buyer May ____ May Not ____ house any commonly considered
domestic pet without first obtaining the Landlord/Seller's written permission.
10. Liquid-Filled Furniture: Tenant/Buyer may not keep any liquid-filled furniture in this
dwelling without Landlord/Seller's written permission.
11. Appliances: The appliances in the dwelling such as a stove, refrigerator, dishwasher,
clothes washer/dryer, microwave, garbage compactor or disposal, or water softener are
the Tenant/Buyer's responsibility. If Tenant/Buyer wishes to use these appliances he/she
agree to assume all responsibility for repair and maintenance.
12. Pest Control: Pest control is the responsibility of the Tenant/Buyer.
13. Locks/Lockouts: Tenant/Buyer agrees that they will not change the locks on any door
or mailbox without first obtaining written permission from the Landlord/Seller. In the
event of a lockout or lost keys Tenant/Buyer is responsible for all costs incurred.
14. Tenant/Buyer Inspection: Tenant/Buyer has inspected the dwelling and its contents
and agree that they are in satisfactory order, and accept the premises in as is condition.
15. Notification of Serious Building Problems: Tenant/Buyer agrees to notify the
Landlord/Seller upon first discovery of any serious building problems.
16. Repairs: Tenant/Buyer shall be responsible for all repairs, maintenance, costs, service
charges, not considered capital repairs. Tenant/Buyer shall take an active role to insure
that the property stays in excellent condition.
17. Damage: Tenant/Buyer agrees to pay for repairs of all damage which they or their
guests have caused to the dwelling.
18. Maintenance/Repairs: Tenant/Buyer shall maintain the property in a clean and
sanitary manner, including all equipment, appliances, furniture and furnishings, if
provided, and shall surrender the same at the termination of the lease period in as good as
condition as received normal wear and tear accepted. Tenant/Buyer shall be responsible
for any and all damages caused by his/her negligence and that of his/her family, or
invitees or guests. Tenant/Buyer shall maintain any surrounding grounds including lawns,
and shrubbery, and keep the same clear of rubbish and weeds, if such grounds are part of
the property and are exclusively for the Tenant/Buyer's use. Tenant/Buyer shall also be
responsible for the maintenance of any pool and/or spa including all equipment and water
condition. Tenant/Buyer may at his/her option and expense contract these services
out.Initials __________

19. Alterations: Tenant/Buyer has the right to paint and decorate the property at his/her
discretion within tasteful guidelines. Any CC&R's take precedence. Tenant/Buyer will not
make any major and/or structural alterations to the property without prior written consent
of the Landlord/Seller. Tenant/Buyer is required to obtain all necessary permits, required
by law, before commencing improvements. Any work performed on the property, whether
by Tenant/Buyer or other parties shall be as an independent contractor or agent of the
Tenant/Buyer and not an employee or agent of the Landlord/Seller.
20. Improvements: Landlord/Seller further reserves the right to construct property
improvements above or below the ground anywhere on the premises, so long as they
conform to all building codes.
21. Emergency Access: Landlord/Seller has the right of emergency access to the property
at any time and access during reasonable hours to inspect the property or, at reasonable
times, to show the property to prospective tenants.
22. Vacating The Premises: The Tenant/Buyer will give Landlord/Seller written notice of
their intentions at least thirty (30) days prior to their vacating the premises, and an exact
date when they expect to be moved out completely.
23. Holding Over: Any holding over after the expiration of the term of this agreement,
with consent of the Landlord/Seller shall be construed as a month to month tenancy in
accordance with the terms hereof, as applicable.
24. Tenant's Purchase Option: In consideration of the Tenant/Buyer meeting all
obligations as stated herein, the Landlord/Seller hereby grants the Tenant/Buyer an option
to purchase under the following terms:
a) Commencing on ______________________________, the Tenant/Buyer shall have an
option to purchase the property located at ___________________________
This option will expire without notice and shall be of no further effect if not exercised on
or before _________________________________.
b) The option price shall be $__________________________.
c) The Tenant/Buyer has paid the sum of $_________________ as non-refundable option
consideration which will be applied towards the purchase price of the property if, and
only if, the Tenant/Buyer exercises this option to purchase. In the event, the Tenant/Buyer
fails to exercise the option or defaults under any terms of this agreement this option will
be void and all monies will be retained by Landlord/Seller as liquidated damages and not
as a penalty.
d) At the time of exercise of this option, $________________________________ of each
monthly rent payment received on or before the first of the month will be applied as
additional option consideration to the purchase price if, and only if, the Tenant/Buyer
exercises the option to purchase. In the event that the Tenant/Buyer substantially defaults
on any payments or other obligations required under this Agreement, the purchase option
will be automatically void and any monies paid for rent or as option consideration will be
retained by the Landlord/Seller as liquidated damages and not as a penalty.

Initials __________

e) The Tenant/Buyer will surrender and deliver the property at the end of the term of this
option in the event the option is not exercised. The property should be delivered in as
good condition as when received except for reasonable wear and tear.
25. Exercise of Option: Notice must be delivered to the Landlord/Seller in writing of
Tenant/Buyer's intention to exercise this option at least Sixty (60) days prior to exercise.
Notice if mailed, shall be by certified mail, postage prepaid, to the Landlord/Seller's
address of record, and shall be deemed to have been given upon the day shown on the
postmark of the envelope in which such notice is mailed.
CONSIDERATION. Initial ________________________
26. Closing Costs:
(a) Real property taxes on the property and general and special assessments if any, for the
current fiscal year shall be prorated to the close of escrow and paid by the
(b) The "closing costs" shall be those costs incurred in conjunction with closing escrow
and shall be paid at the close of escrow as follows:
(1) All closing costs shall be paid by Tenant/Buyer.
27. Assignment: The original Tenant/Buyer may have the right to assign this Residential
Lease Purchase Agreement subject to the owners permission. Any other
person(s)/assignee wishing to assign this agreement must have the express written
permission of the owner. An assignment fee received by the original Tenant/Buyer May
_____ May Not _____ be credited to the Option Consideration.
28. Heirs, Assigns and Successors: This agreement shall include and insure to and bind
the heirs, executors, administrators, successors, and assigns of the respective parties
29. Encumbrances: (a) The parties agree that neither will cause or permit any lien to
attach to or exist on or against the subject property, which shall or may be superior to the
rights of either party or to encumber the property in any manner without having obtained
the written consent of the other. (b) Prior to the exercise of the option, Landlord/Seller
reserves the right to change existing encumbrances on the property through refinance,
early payoff of the loan(s), or modification of existing loan(s) so long as said change
would not create an encumbrance exceeding the agreed upon value of the property; (c)
The Landlord/Seller upon payment of said purchase money, shall convey said property by
General Warranty Deed, free from all encumbrances except:
and shall furnish a policy of title from a reputable title insurance company at his expense
so showing.

Initials __________

30. Insurance: Landlord/Seller have obtained insurance to cover fire damage to the
building itself and liability insurance to cover certain personal injuries occurring as a
result of property defect, or Landlord/Seller negligence. Landlord/Seller's insurance does
NOT cover Tenant/Buyer's possessions or Tenant/Buyer's negligence. Tenant/Buyer shall
obtain a renter's insurance policy to cover damage to or loss of their own possessions, as
well as losses resulting from their negligence. Tenant/Buyer agrees to show
Landlord/Sellers evidence of such policy within (1) month of this Agreement.
31. Damage by Fire: In the event that the property is damaged by fire and through no
fault of the Tenant/Buyer, and cannot be restored within a reasonable time in the opinion
of the Landlord/Seller, this agreement shall terminate with no further liability of any
party. Should fire or casualty damage have been caused by Tenant/Buyer's own action or
neglect, they shall not be relieved of the responsibility for payment of rent, and they shall
also bear the full responsibility for repair of the damage.
32. CC&R's: Tenant/Buyer acknowledges receipt of all pertinent rules and regulations
and CC&R's concerning this property.
33. Possession: Landlord/Seller shall endeavor to deliver possession to Tenant/Buyer by
the commencement date of this Agreement.
34. Default: The occurrence of the following shall constitute a material default and
Breach of Contract by Tenant/Buyer: Any failure by Tenant/Buyer to pay rent on time or
perform any provisions of this lease to be performed by Tenant/Buyer where such a
failure continues fifteen (15) days after written notice thereof by Landlord/Seller will
constitute a material breach of this contract and forfeit the option to purchase. In addition,
the term of this contract will immediately become month to month. In the event of any
such default by Tenant/Buyer, then in addition to any other remedies available to
Landlord/Seller at law or in equity, Landlord/Seller shall have the option to terminate this
lease and all rights hereunder by giving written notice of intention to terminate.
35. Process Serving: Every Tenant/Buyer who signs this Agreement agrees to be the
agent for any other Tenant/Buyers and occupants of this dwelling and is both authorized
and required to accept, on behalf of the other Tenant/Buyers and occupants, service of
summons and other notices relative to the tenancy.
36. Enforceability: Should any provision of this Agreement be found to be invalid or
unenforceable, the remainder of the Agreement shall not be affected thereby and each
term and provision herein shall be valid and enforceable to the fullest extent permitted by
37. No Waiver: All rights given to Landlord/Seller by this agreement shall be cumulative
to any other laws which might exist or come into being. Any exercise or failure to
exercise by Landlord/Seller of any right shall not act as a waiver of any other rights. No
statement or promise of Landlord/Seller or his agent as to tenancy, repairs, alterations, or
other terms and conditions shall be binding unless reduced to writing and signed by
Landlord/Seller. Should either Landlord/Seller or Tenant/Buyer waive their rights to
enforce any breach of this agreement said waiver shall be considered temporary and not a
continuing waiver of any later breach.

Initials __________

38. Indemnification: Landlord/Seller shall not be liable for any damage or injury to
Tenant/Buyer or any other person, or to any property, occurring on the premises, or any
part thereof, or in common areas thereof, unless such damage is the approximate result of
the negligence or unlawful act of Landlord/Seller. Tenant/Buyer and Landlord/Seller shall
further indemnify and hold the preparer of this contract harmless from any and all claims
arising from this transaction.
39. Time: Time is of the essence in this Residential Lease Purchase Agreement.
40. References in Wording: Plural references made to the parties involved in this
Agreement may also be singular, and single references may be plural. These references
may also apply to Landlord/Seller's and Tenant/Buyer's heirs, executors, administrators,
or successors, as the case may be.
41. Attorney's Fees: The prevailing party shall be entitled to all costs incurred in
connection with any legal action brought by either party to enforce the terms hereof,
including reasonable attorney's fees.
42. Entire Agreement: This Agreement and any attached addendum constitute the entire
agreement between the parties and no oral statements shall be binding. It is the intention
of the parties herein that if any part of this Agreement is invalid for any reason such
invalidity shall not void the remainder of the agreement.
43. Preparer's Disclaimer: All of the undersigned parties or their assigns in this agreement
agree not to hold the preparer of this document liable for any errors, omissions, mistakes
or negligence.
44. Modification: Any modification of any portion of this agreement must be made in
writing and signed by both parties.
45. Financial Disclaimer: The purchase option is not contingent upon the Tenant/Buyer's
ability to obtain financing from a lender or any other reason, and the Landlord/Seller has
not made any representation or warranties as to financing. The Tenant/Buyer understands
that time is of the essence for this Agreement and that his/her failure to purchase the
property before the expiration of the option, for any reason, all monies paid by the
Tenant/Buyer will be retained by the Landlord/Seller. It is further agreed that this
Agreement is not an installment land contract, contract for deed, or equitable mortgage.
Initial _______________
46. Acknowledgment: The Tenant/Buyer hereby acknowledges that they have read this
Agreement, understand it, agree to it and have been given a copy. They further have been
advised to seek legal, tax and technical counsel concerning this contract prior to signing.
47. Breach Of Contract: If Landlord/Seller shall rent, accept an offer for sale or purchase,
cancel or in any way breach this agreement before the expiration of said agreement with
the original Tenant/Buyer, this contract shall revert to a consultation and a consultation
fee of $1,000.00 shall be immediately due and payable. Landlord/Seller also agrees that
Landlord/Seller is responsible for the reimbursement of any deposits or other monies
accepted from any prospective assignee. Additionally, the Landlord/Seller agrees to hold
the original Tenant/Buyer harmless from any further liability or obligation under this
agreement or from any cause of action brought by any party caused by the
Landlord/Sellers breach.
48. Misc.:
This agreement shall become void after 60 days if the original Tenant/Buyer has not
assigned this Agreement. The original Tenant/Buyer shall have the right to renew this
Agreement for an additional sixty (60) days if original Tenant/Buyer so chooses.
______________________________ ______________________________
Landlord/Seller Tenant/Buyer
______________________________ ______________________________
Landlord/Seller Tenant/Buyer
Date _________________________ Date _________________________