The REAL ESTATE SECRET of Lease Purchasing

BY: CLAUDE W. DIAMOND J.D.

DON’T EVER BUY.........RENT !!!!!

Such blasphemy! What kind of successful investor would advise anyone to rent instead of becoming an owner?

The answer: a smart one!

What if I showed you a way to profit in real estate without large cash deposits; not having to apply for bank loans, no overhead, no maintenance, no taxes, insurance or home owner fees to pay. You would probably say that that type of investment does not exist or that such an idea is the product of the author’s wild imagination.

Well, it’s time to learn about the best kept secret in real estate: it’s called Lease Purchasing, known also as ‘renting to own’ or ‘leasing with an option’. Anyone can control real estate that generates immediate positive cash flow without having to become a real estate expert or by having to look at hundreds of houses. If you know how to rent, then you can put together all kinds of profitable cash generating transactions with just a telephone.

Lease Purchasing allows you to create small and large deals without going to the bank.

Why Lease Purchase?

Controlling real estate through Lease Purchasing, whether it’s for your own home or as an investment property, is by far the superior method of finance. Lease Purchasing helps to remove the traditional adversarial relationships that exist between buyer and seller and produces greater profits.

In most real estate transactions there is a natural tendency between the buyer and seller to try and beat each other up. One wants a lower price and the other wants a higher one. Not to mention all of the other items that have to be negotiated. Next come all of the difficulties associated with deposits, qualification, appraisals, title companies, lenders, escrows, lawyers, etc., etc. Lease Purchasing eliminates these problems and lets the buyer and seller have a win-win experience and get the deal done.

A Lease Purchase is a process where a rental agreement is combined with a purchase or more specifically, an option contract. Price, length of contract, escrow instructions, rent credit and other pertinent terms are all negotiated in advance. The tenant/buyer has a percentage of his rent credited to the down payment or off the price. In many cases, more money is being applied monthly, than an actual mortgage payment would be to the principle.

All the parties concerned can benefit by doing a Lease Purchase transaction. Let’s examine the advantages for the buyer, seller and investor.

From the Buyer’s Viewpoint:

Generally, this is a renter who can’t purchase a home through conventional means. This buyer does not have a large enough down payment for a bank loan, minor credit problems, a new job, high loan to debt ratio or other reasons that make a traditional purchase of a home impractical (impossible) at this time. The buyer is aware of the advantages of home ownership (tax shelter, appreciation, security, etc.) and is eager for a chance to get involved in a home of his own and get out of the rental rat race. Our buyer can lock in the future purchase price even though ownership may not transfer for a year or more. A percentage of the rent can be credited toward the downpayment or off the price. During the terms of the contract, the tenant/buyer has time to check out the house, neighborhood and to obtain the best financing.

From the Seller’s Perspective: If you are a seller and the market demand is very low for your property, the best way to get your full asking price would be to Lease Purchase your home. Since you are being flexible on your terms you are entitled to get your full asking price and a higher than average or premium rent for your property.

When you find a prospective buyer/tenant you normally receive option consideration. This is a nonrefundable amount, that in many cases, can be several months rent. If and when the buyer wishes to utilize her option, then you will hopefully receive your capital profits when escrow closes. If the buyer, however, allows the option to expire you also win since you can begin the whole process all over again and either renegotiate the contract or find a new tenant. In either case, you receive more option consideration for the same property. If the property sells, then you use some of your profits to reinvest in another house. The potential for profit for the seller is fantastic since a well negotiated deal will always reap profits at every stage of the Lease Purchase.

From the Investor’s Viewpoint: The Lease Purchase has everything an investor needs to make prudent, profitable investments in real estate. Utilizing very small down payments (1-2%), an investor can control properties that normally require 10-30% down without utilizing a lender nor going through the loan application circus. A good deal can generate profits three different ways:

1. Cash upfront with option consideration 
2. Cash monthly (rent) 
3. Cash at the close (or a first class note)
4. Arbitrage Assignment Fee’s
5. Hybrids (Sandwiching and assigning)

From The Professionals Viewpoint: Many a professional within real estate  such as realtors, lenders, Attorneys, escrow and title people are utilizing Lease Purchasing profitably as an alternative strategy.  For many of their clients traditional financial methods for buying and selling are just not practical. The professional who can offer alternative option strategies allows a plethora of profit options for their business in challeging times

Other Lease Purchase strategies involve the assigning or flipping of the optioned property to a third party or just being a consultant for the buyer and seller and retaining a portion of the option consideration.

In summary, controlling properties by renting with an option (Lease Purchasing) is the absolutely best way to be involved in controlling homes and obtaining great cash flow, high profits and minimum risk. Lease Purchasing can be the best way to create quick cash flow for the first time homeowner or the seasoned investor.

Claude Diamond J.D. (yes, I answer my own phone (970) 281-5151

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IS Super Wifi the future of sales

Found this interesting article in the future of Super Wifi




Wally Wang's Apple Farm
“Video Calling”
by Wally Wang

If you want to make a video call on a Macintosh, you can rely on iChat, which requires a free AOL Instant Messenger (AIM), AOL, MobileMe, or ICQ account. With iChat, you can videoconference among multiple people (provided everyone has a fast enough Internet connection). However, with the introduction of FaceTime on the iPhone 4 and iPod Touch, it's safe to say that FaceTime will work its way to the Macintosh and eventually replace or become part of iChat.

The FCC recently approved the use of "Super Wi-Fi," (www.tweaktown.com/news/16884/fcc_officially_gives_super_wi_fi_the_green_light/) which will take over the old spectrum that television channels used to have. The two main features of Super Wi-Fi are its fast speed and longer range, essentially putting rural areas within reach of Wi-Fi signals rather than limiting Wi-Fi to a single household.

Consider what might happen if entire cities offered Super Wi-Fi networks. Now you could make a FaceTime video call without going through a cellular phone network at all. What will that do to the cellular phone companies? Unless they rapidly convert to Super Wi-Fi to supplement and eventually replace their cellular network, they'll be disappearing as quickly as Blockbuster Video.

If every place has Super Wi-Fi available, that will be the new cellular network and we'll all be able to use FaceTime-like video calling to do everything our current mobile phones can do and more.

Ordinary audio phone calls might be nice when calling in sick and pretending to be ill, but for many people, video calling will be more fun and convenient (especially since you'll have the option of chatting through video or just through audio), and that will spell the end of audio-only calling as quickly as telephones have replaced Morse code and the telegraph.

After decades of promises from the phone company that video calling would soon arrive (www.scribd.com/doc/25746873/1956-Aug-24-Hutchinson-News-Herald-Hutchinson-KS-Paleo-future), it may already be here courtesy of technology like FaceTime.

How to make money in Lease Purchase real estate

Cold Calling and Reality Sales Training

The Lease Purchase Times Newsletter

John reed review article I just read -Claude Diamond review

Just read an interesting article on a consumer advocate webpage (click article to connect) http://www.ripoffreport.com/reports/0/065/RipOff0065784.htm It's all about john t. reed that I thought you might find interesting.

Reed does business in a way I object to and would refrain from utilizing. He attacks everyone (competition) including yours truly and then peddles his own wares. He comes across as tacky, obvious and mean spirited.

quote from article:
"John Reed has gone on to investigate family members of his competition including 74-year-old women and visiting the grave of a guru's father. This is all one his web site including how he states that a guru probably deserved the abuse he received as a child that included being burned with an open flame and says such practices were acceptable in the 60s."


In my brief conversation with reed (many years ago) I found him humorless and at the conclusion felt sorry for him. Heck of a way to make a living by attacking others.

This article on his encounter with Russ whitney is a real eye opener. I can't imagine why anyone would go to such trouble.



Claude Diamond

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What Should be in a Good Lease Purchase contract

What should be in a Good Lease Purchase Contract

What should be in a  Good Lease Purchase  Agreement ?

BY CLAUDE W. DIAMOND J.D.- http://www.ClaudeDiamond.com

Lease Purchasing is one of the most profitable and practical ways to be in real estate. You don’t need a bank or a pot of gold to get started. There is an absence of Tenant & Toilet problems (if setup correctly)!   It’s creative and even fun ! 

Lease Purchasing can also be a nightmare if you do not have the foresight to have well designed, strategically written contracts.

Recently I was asked by a reader (via our Web site www.claudediamond.com) where he could find good generic Lease Purchase contracts. To me that is like asking a neurological surgeon if he can recommend a do it yourself brain surgery kit and combination salad maker!

I advised the reader that there are generic contracts from several sources.  One such source is your local real estate agent or office.  They have the multi-purpose  fill in the many blank type forms.

The question remains, however, are they any good or even WORTH THE PAPER THEY ARE WRITTEN ON ?

My handy Law Dictionary defines Generic  as follows: Something not specific or not referring to a specific thing.

Generic contracts are just that generic.  They are designed with the one size fits all concept. In reality, they are not designed to protect you or your interest in the particular Lease Purchase transaction with which you are currently involved. 

I have collected many of these so called generic Lease Purchase contracts for years.  Not only have I gotten contracts from Realtors and stationary stores;  others came from the get rich quick, while staying in bed all day, books and seminars. They all have one thing in common. They’re garbage !  They are poorly written and lack the necessary clarity and/or specific verbiage inorder for the contract to be enforceable.

I have designed and utilize six specific contracts for my own Lease Purchase deals. Which one I use is determined by the hat I am currently wearing at the time. Am I the Landlord/Seller, the Tenant/Buyer or the Assignor/Assignee? Will I be Subletting, Assigning, Sandwiching, Pure Optioning or just quick flipping ?  

TIP: I always carry a couple copies of my Lease Purchase Contracts in my car’s trunk right next to my earthquake emergency kit* compartment.  An investor is always prepared !

Here are a few suggestions for items that should be contained in any Lease Purchase Agreement.  Some of these may seem like obvious inclusions.  Having been involved in Lease Purchasing for many years now, I can tell you that the obvious is not always so!

1. Identify the principle parties: Who is the Tenant/Buyer and who is the Landlord/Seller?

 It  might even be a good idea to do business as a corporation.

2. Location of the property: Use the parcel identification number (PIN) and the street address. 

There should be no mistake about which property you are dealing with.

3. Date and Signature: Make sure all the owners sign the contract.  This includes spouses, partners or anyone who has ownership or an equitable interest in the property.

Big problems  can occur with a Lease Purchase if you don’t have all the owners sign. Better yet, check the title, loans, etc.

4. Term: Be specific on the length of the contract.

Strategy Tip: If you are negotiating with the owner make the contract for as long as possible. If you are the owner or are subletting the property, make the contract no longer than one year. 

5. Be Specific: All the terms, including Price, Rent Credit, Closing Costs, Option Consideration, Financing and Escrow should be included.  No term should be ambiguous.  Be specific ! 

6. Right of Assignment:Be sure that you have the right to sublet-transfer and convey the property to a third and in some cases a 4th Party.

Generic Contracts, YUCH !!!  I would recommend that you never use a generic contract!  If, however, you choose to do so, have it reviewed by a competent attorney who is either a real estate investor or who specializes in real estate law.  (Sorry, it’s the Perry Mason in me!)  Better yet have him design an agreement that meets with your needs, expectations and of course, PROTECTS YOU. 

P.S. Without sounding too legalistic make sure your agreement also includes-Indemnification-disclaimer-notification and Force Majeure clauses too. There are several other clauses that can be also included to maximize your profits and decrease your expenses. Give me a call and we can discuss

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