Hi guys! Rick Otton here.
I was just thinking about Lease Options.
I had a great thought. Quite often students asked me which is the best strategy to put together, when you want to do a transaction.
How about we think about that for a second and we will ask a different question which might be: “What is the problem that needs to be solved?”
What does the solution need to look like in order to benefit the client? And then what we’ll do is find a strategy that we could drop in, that underpins the whole thing and makes it all work.
For instance, someone said to me the other day: “I’m going to pay a guy so much a month, then another guy will move in paying so much a month. What’s the right strategy?”
We can actually use pretty much any strategy. Will it be a lease option or an instalment contract a 10-10, or 2-1 buy down, if you just have to pay the guy so many pounds a month, every month going out, to the other guy taking so many pounds we get from him coming in…
Guys, it doesn’t really matter about the strategy. We can make it better. Just pick one strategy and they all work. They’ve all got fringy things about it. It’s a little bit like cars. All cars get you to the supermarket. But there are different makes and models, the way you put the petrol in is a little different, the way you start is a little bit different. I had a French car once – man, that was really, really different from what I was used to.
So it’s not so much about the strategy. It’s more about what the solution has to look like.
It might be some guy saying, “Look you can take my house and give me 10 to 20 thousand pounds down and make the payments on it.” I can do that with the lease option instalment contract, a deposit builder, it doesn’t really matter.
And then some other guy is going to come in and just pay me more each month than what’s going out. Now the guy that’s paying you more each month than what’s going out means you’re making a profit.
How do you get this thing right? Write this down: just make sure more is coming in each month than what goes out. If you get it the round way around, where less comes in, more goes out, it’s not a real good look and you want to change that around a little bit.
I want you to think about strategies second. Like doctors of real estate think about what the problem is, what the solution has to look like in concept, and later on we can wrap a strategy around it. And all strategies work; they also do the same thing: get people from sort of nowhere to somewhere.
I am always thinking about how we can make more money, make more cashflow out of any property without having to spend lot of money rehabbing it, refurbing it, renovating it. And the best way you can add value to the property without having to do all that work is put something in the structure under the way people can buy it or get into it. Make properties easy for people to buy. Make it easy for people to get in.
It’s really, really easy for people to get out and it’s really easy for you to make a profit.
There’s an old expression that says…well actually Zig Ziglar said this: “Figure out what people want and give it to them. You’ll get what you want by default.” No one really cares how much you make if people get what they want first.
If a man is really, really sick, and you make him better, he doesn’t really care how much you charge him. He just wants the result of what you did. It’s a different way of thinking.
Anything you want the answers to, or any transaction you want to try and put together, welcome aboard. That’s what it’s all about here: different thinking, alternative thinking, smarter thinking, and accepting the fact that some of those traditional systems we used back then in 1677 need a little bit of an update. Sometimes it’s a little bit like Uber and Airbnb.
You know institutions and traditionalists always get there after the people have already arrived. So let’s do the same thing with real estate. Let’s get to where the people want to be first, and worry about everything else later.
My name is Rick Otton, welcome aboard and we’ll be doing more of this more often. Bye!
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