One of my favorite things about flipping land is how flexible you can be.
You can offer your buyers a range of options to finance the property that you are selling. In this episode, I’ll explain how to flip land with a lease purchase agreement.
In essence, a lease purchase agreement lets the buyer rent the property from you, with a portion of the rent going towards purchasing the property.
Learn everything you need to know about flipping land by joining us for a live Masterclass, starting Jan 18! Register to attend our Land Flipping MasterClass, here.
What Is A Lease Purchase Agreement?
A lease purchase agreement is a way to sell a property by having the buyer rent the property and then get credit towards buying the land.
A lease purchase agreement is NOT the same as a lease option agreement. When people first start flipping land, they often get confused between the two.
A lease option agreement is an agreement where you rent the property to someone and they have the option to buy the property. It is a stereotypical lease.
“For example, instead of asking for a $2000 deposit and $500 p/month in seller financing, you can instead get a $5000 deposit and $500 p/month in rent. The buyer will then get credit on a monthly basis to eventually buy the land.”
If this sounds a little technical and overwhelming, don’t worry. There is a lease purchase agreement built into the Land Profit Generator that you can use! If you would like to access these documents, attend my weekly webinar and take a look at the Land Profit Generator Starter Pack.
Why Use A Lease Purchase Agreement when Flipping Land?
There are many benefits to flipping land using lease purchase agreements when you are in the business of flipping land.
One of the biggest benefits is that with this type of contract you are able to evict people instead of foreclosing if your buyer defaults on payments.
An eviction is much faster than a foreclosure. For example, Ohio is a judicial foreclosure state. It might take you 6 months and a thousand dollars with an attorney to get this done. If you used a lease purchase agreement, you can simply send the buyer a letter of abandonment, evict them, and resell the property.
When flipping land, we prefer to use lease purchase agreements for lower-value properties.
With the more expensive properties, you will automatically have a larger profit margin, and therefore you will be able to afford a judicial foreclosure.
So, when you are negotiating the sale of a lower-value property when you are flipping land – consider using a lease purchase agreement! It will save you time and money down the line.
- How to use lease-purchase agreements when flipping land
- Find out how and when to use a lease-purchase in your land flipping business
- Understand the benefits of using a lease-purchase agreement