Kathy Kennebrook also mentions here that may be times when the tenant/buyer ultimately doesn’t close on the property and you end up repeating the same scenario with a new tenant/buyer on the same property. Kathy Kennebrook would never want you to intentionally set up a tenant/buyer to fail. She has her mortgage broker follow up immediately with her tenant/buyers to start working toward getting the financing in place in order for them to be able to purchase the home.
But sometimes scenarios arise where a tenant/buyer will simply walk away from the deal. Kathy Kennebrook has had this situation occur when the tenant/buyers ended up getting a divorce and never closed on the property. They both just walked away from the property and from the deal. She has also had scenarios arise where she had to evict the tenant/buyer for non-payment of rent.
By the same token, Kathy Kennebrook had another scenario where a doctor moved into one of her properties as a tenant/buyer, paid a significant non-refundable option deposit and then ended up building another house somewhere else and never closed on hers. So there may be times where you end up lease/optioning the same property more than once. This is not necessarily a bad thing. In fact it will just make you even more money.
One of the other advantages to lease/optioning properties is that it can be a good tax strategy for you since you can depreciate these properties for as long as you hold them. When you quick turn properties or wholesale them on a regular basis, you end up paying a lot more to Uncle Sam in taxes. Kathy Kennebrook remembers the point at which her CPA told her “you have to stop selling everything you get your hands onâ€.
When you hold properties by renting or lease/optioning them, you end up being able to take deductions for the properties and depreciating them. When you hold a number of lease/option properties or rentals, the amount you get to depreciate can become quite large. Of course you will need to check with your CPA as to what strategies tax wise are best for your personal business. A good CPA will make sure you are getting all the benefits you are entitled to. Your CPA is going to be another important part of your dream team. But Kathy Kennebrook will tell you that a call like this can certainly cause you to transition from a position of selling everything you buy to starting to hold onto some properties long term.
Lease optioning properties is also a good way to replace income. If you find you need a certain amount of money to live on each month, you can put together a group of lease/option properties that create that monthly income for you. Once you have a group of lease/option properties in place, this will allow you to create the income you need in order to quit a job you don’t like and do the real estate business full time if that is what you choose to do. Or maybe you want to build a portfolio of properties to supplement a retirement income. Lease/optioning properties allows you to make the choices for yourself and your business that are best for you.
For more information on marketing to find motivated sellers and buyers for your real estate investment properties, visit Kathy Kennebrook’s website at www.marketingmagiclady.com. While you are there, sign up for Kathy’s free monthly newsletter and get 149.00 in FREE real estate investing information!!!