While the option fee is non-refundable, don’t get excited on your first deal by immediately going out and buying that big screen TV you’ve always wanted. What if something happens down the road in six months? In owning or controlling real estate there are things that come up that are completely unexpected: broken furnaces, leaking roofs, unpaid rents, etc. Plan ahead for those things and you will be safe. If you have held the option funds in reserve, you will be able to cover your expenses. That’s just good business sense. Yes, the money is yours to keep, but be wise with it because you may need it. You might actually want to put it aside entirely for a “rainy investor’s day” so that you will be prepared. Then after the deal closes, you can take another look at the money because not only will you have that initial option fee, now you’ll have the backend from the closing. As you are getting started in this business or any other business, it is important to be conservative with your cash flow and money. I recommend you keep your spending very tight and conservative. Also, you may want to be prepared to buy the next property should a good deal be offered up to you. Unfortunately most of our country does not have good spending habits, and therefore these habits allow people to get into financial trouble. It is very important to be on a strict budget for this type of business. If this will be hard for you, then you may want to find some outside help to get you on a system, which can enable you to get this set up. I cannot stress enough; it can be a make or break for people!

      Let’s say you made $30,000 overall on the deal. Here’s one positive way to use that money:

      Reinvest. Reinvestment will continue to bring income, but you will also want to pyramid your income. For example: if your first property made $30,000 overall and you received $5,000 in an up front option fee, now you’re going to want to look for 2-3 new properties, probably with the same profit ranges. You’ll need money up front to pay your option fee to the seller, even though you will reimburse yourself later with the option fees from the buyer. Also, the properties may need repairs that will also need to come out of your pocket up front, so you need to have the funds available from the previous sale. During this time you will probably still be keeping your day job just to keep enough cash flowing in while you are building your new business. Reinvesting also doesn’t just mean pouring money into new properties. It can also mean purchasing new office equipment, software or anything else you need to continue to build your business. Maybe it’s time you trashed that clunker computer and got one that was made in the 21st century, install a 2nd phone line or get bookkeeping software. I cannot stress enough: be prepared for your future!

      At this time my average deal is $40,000 in profit for a sandwich lease option. Lease options typically turn over every 18-24 months. Depending on what part of the country you reside in the profit range will vary from $20,000 – $120,000 (Midwest to Northern California). You decide how much you need to make, and then you will know how many homes you need to lease option. Not only can lease options set you up to live today, but they can set you up for Future Financial Freedom and retirement. Just sit back and imagine…how would it feel to be completely debt free? Real estate is the vehicle that can allow you to achieve just that.