Great Lease Purchase Strategy - The Assignment
Below is a MRR and PLR article in category Finance -> subcategory Real Estate.
Effective Lease Purchase Strategy: The Assignment
Overview
The assignment strategy is the most straightforward of all lease purchase methods and involves minimal investment and risk while allowing for quick profits. Instead of acquiring the property and subletting it or engaging in sandwich leasing, you can sell the contract itself. By doing so, you create a valuable asset that can be sold or even financed through a note.What is an Assignment?
An assignment involves negotiating a deal with the property owner and documenting the terms in a specialized contract. This contract can then be sold, or "assigned," to a third party, such as a tenant/buyer or another investor. Typically, a lease purchase agreement includes an assignment clause, allowing the rights within the original contract to be transferred or conveyed to another party.Practical Example
Consider a property in a desirable neighborhood with good schools. The owner was relocating and wanted to avoid dual mortgage payments. The property, valued at $100,000, had a $95,000 mortgage with $1,000 monthly payments, covering principal, interest, taxes, and insurance (PITI). Real estate agents had declined to list it due to insufficient commission potential.I proposed a lease purchase of the property with the right to assign the purchase for the mortgage balance. I agreed to pay $1,000 monthly and handle any maintenance/repairs under $100, providing $1,000 as option money and covering the first month’s rent with a 20-day lead before payments began.
The owner accepted. I then reached out to potential tenant/buyers. One, who had recently filed for bankruptcy, needed a home in a family-friendly area and aimed to secure a mortgage within two years. This property was an ideal fit. I offered him the chance to purchase the property for the mortgage balance by selling him the contract (assignment) for $6,500. He had only $3,500, so I agreed to accept the remaining $3,000 as an unsecured personal note, interest-free, payable monthly over one year.
Conclusion
This arrangement allowed me to recover my $1,000 investment, earn a $5,500 profit ($3,500 in cash and a $3,000 note), and exit the deal successfully. Assignments are an excellent way to profit from flipping homes without purchasing them, benefiting all parties involved.You can find the original non-AI version of this article here: Great Lease Purchase Strategy - The Assignment.
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