Lease Options

How I set my fees in lease purchase consulting

How I set my fees with least purchase consulting

I’m going to presume that you want to be a lease purchase consultant and that’s all you want to do,

If you’re in a state California or New York that has pretty strict regulations you might want to get licensed to sell or lease real estate.

Then you want to find a broker that will allows you to do lease purchase consulting.

If you’re in a state that isn’t so strict, then just a business license should do it.

I would see an attorney, if you’re a client of mine as a coaching client, I’m going tonmake sure that you see an attorney for your protection.

That’s said let’s talk about fees.

FEES

First and foremost, we make our money generally from the option fee of rent to own arrangement with the buyer. This saves the seller a lot of money.

If you were my client, I would talk to you about a business plan.

Business plan
I would go over two things:

firstly, what is your “nut” personally.

That means if you added up everything that you spent in the last 12 months, from rent to food to kids to taxes, how much money did you need before tax?

Take a look at your tax return last year. If you’re a W-2 employee, what was your gross?

If you’re at 1099 sales person or a business owner, what were your gross receipts on your schedule C?

I highly recommend you go to CPA and ask him about your retirement goals as far as money put away to an IRA or 401(k).

Then I would open up an LLC.  I helped my clients with op for their LLC .

Depending on the state, they’re not that expensive. Make sure you have Real Estate as a category so that you can be a real estate professional to the IRS. Look up real estate professional on the irs.gov website.

The worst state for LLC fees is California, which is $800 a year, which is crazy! Most states are A LOT  cheaper but you do need an LLC in the state that you’re working in.

So numbers…

Lets say you’re an inexpensive 3 to 4 bedroom marketplace, $100,000 is a good 3 to 4 bedroom house and in a good school district.

I would charge $5000 for an option fee, which is subtracted from the purchase price of the comps.  You can raise the price a little bit, let’s say $102,000, subtracting $5000 from that, Sales price or exercise price would be $97,000.

I would require the buyer to pay the closing cost, and any other cost to sell.

We are not gouging the buyer, they are getting into the house that they need today, the right school district and in the right condition Yeah;  they might be paying a tiny bit over, they are getting a great house.

I won’t go over negotiating with the seller here, but our job here is to maximize the sellers’ equity dollars that are in the house. Lease purchase does that for the seller.

So for a $100,000. three to four bedroom market, you can expect $5000 average income.  Check with your CPA on income taxes.

So let’s say if you added it up everything you made before taxes $50,000, and you want to make the same amount of money and lease purchase consultant or better.

In your first year at least in lease purchase  consulting, you gonna have expenses….gas and printing so forth. So let’s say you shoot for $80,000 gross. How many $5000 deals do you need to make that?

Now let’s say that you’re in a more expensive market, let’s say that the median price range for a modest three or four bedroom houses $400,000, and 3% of that is $12,000 per house. You have to do less houses to make the same amount of money!

This is very rough. Hopefully you will do better than you shoot for.

NOT A LOT OF COMPETITION

There’s not a lot of competition for lease purchase consulting.

Don’t believe me? Go on craigslist and see how many lease purchase consulting or at least purchase houses you see. Not many!

In our marketing training, we like to go after for sale by owners, landlords, and talk to Real Estate Brokers About houses that aren’t selling or difficult to sell.

If you’re excited about the idea of working in the field at lease purchase consulting, contact me at 818-400-3046 Or email me at Brian@REISKills.com

For many students, I act as a silent partner and split deals until you can get on your feet. You get to use my experience when you talk to Sellers because you’re brand new.

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