We found retail buyers and “sold” them the property using a lease option. The lease option period was for six months. The option fee was $2,500. We agreed on a purchase price of $300,000. Let’s summarize so far. So how did we make any money on this deal? Everything is the same between the “bought” numbers and the “sold” numbers.
We negotiated a $2,500 monthly lease payment from our buyers. Over the six months we would receive $15,000. None of the lease payment would apply to the purchase price. We were guaranteed good tenants because they were buying the property and were practically homeowners We went back to the seller and negotiated a six-month lease for a $1,000 monthly payment.
All of our lease payments would be credited toward reducing the purchase price! Are you starting to get the picture here? We made money on this deal two ways. We received a net $9,000 in lease payments. We received $6,000 at closing because of the reduced purchase price we paid to the seller based on our lease payments being credited. So we made $15,000 total on the deal. Is this a fun way to make money or what?