Now that your credit score is increasing, lets start putting our overall business plan together. Every business should have an overall mission statement.

I will let you use mine if you promise to follow it religiously. This will be your intent, focus, and motivation. I think a lot of people just head out, trying to look for real estate properties, with no plan of what exactly they are going to do when they actually find the Sweet Deal. Anyone can drive around looking at properties, look in newspapers, and have a realtor, but if you dont have a structured plan in mind it will be difficult to make things happen.

Mission Statement

I am in the business of finding bargain properties in which I will sell on a lease to purchase agreement. I am looking for persons who want to buy a home, but have been denied lending through their financial institution. I help them repair their credit, introduce them to my mortgage broker, and within a year they own their very own home. After creating a happy and appreciative customer, I then acquire referrals. Now that you are focused on what you are supposed to be doing, you need to begin to put every thing in place.

Business Plan

Target Property

The most common clients you will have are young people who are eager to purchase their first own home. So at first your target property should be starter homes. You will probably be dealing with young couples that have been trying to purchase a home but just dont have the credit. After you really build up your business their may be times that you find a buyer before you find the property. You can actually ask them exactly what they want, and then go find it for them. Starting out I would focus on a starter homes that you can pick up for at least 10-20% under market value.

Ultimate Plan

If you want to create a serious source of income you need to have a great plan and set goals for yourself. I will teach you two different ways to sell properties on a lease option or rent to own. The first will not require any of your money or credit. They are a bit more difficult to come across, but are very effective. They are called Sandwich Lease Options. You are purchasing the property on a lease option, but are also subleasing the property to your tenant. This can typically be done when a property owner cant sell their home and is tired of making the payments. The downfall is there is not as much profit margin, and it is sometimes difficult to persuade the seller that they will have to wait a year for their property to sell. If your credit is a little beat up or destroyed, this is where you will start. It is a great technique for beginner investors because there is not a lot of risk and you dont need to use your own credit or money. The way I like to sell lease options is to actually purchase the property first by acquiring an interest only loan.

There are also loans available with 100% lending, known as an 80/20. The lender will give you two loans, one of the loans for 80% of the purchase price, and the other loan for 20% of the purchase price. This type of loan will keep you from putting money down, and will also lower mortgage payments dramatically. If you are only going to own the home for a year, it does not matter what your interest rate is, or that you are not paying towards the principal. In both situations you will be requiring a deposit from the tenant; you will also have a descent monthly profit every month, and will also make your sizable profit at the end of the lease agreement. Now your ultimate business goal is to have numerous lease options in process at all times. You will make some great up front money, have a great source of monthly income, and will acquire your big profits from a few properties that are purchased from you every year. Are you ready?

Building You Team

Mortgage Broker

One of the key players in your team will be a really good mortgage broker with access to many different types of loans. Most mortgage brokers are able to get you Interest Only loans. They also should be able to provide you with 100% lending. Do not go to your bank, they are governed by the federal government and have specific underwriting laws. When you go to a bank, you will normally be required to put 5% down on the property. Huge insurance companies who have tons of money to invest generally fund mortgage companies. They provide the money to certain mortgage companies as an investment.

They do not have to follow the same laws as banks and are more flexible with their loans. Let your new mortgage broker know that not only will you be coming to them for investment loans, but you will also be bringing your tenants to receive funding as well. Be sure that they are dedicated to their job and are going to be available to help you. Find out what type of loans are available, and the credit score needed to acquire the loan. You will need this information when you go over everything with your potential tenant. Now you will know exactly what is available to yourself and your potential tenant. You will also be able to determine whether their credit score can be repaired to actually acquire lending within a reasonable amount of time.

Realtor

Another key player is a great realtor. They will serve a few purposes for you. Let them know that you are in the market for investment properties. A good realtor will be able to locate properties and run comparisons for you. Obviously you need to know the Market Value of a property before you make a purchase.

You need to be sure to leave yourself enough profit margins. Another great resource that a realtor can provide is they will know plenty of people who dont qualify for lending. They will have clients that have them find a home for them, but when the time comes to make the purchase, they are unable to qualify for the loan. This is where you come in. Have the realtor give your card to people like this. You can even offer to compensate them for their efforts. If a realtor works with someone, and then does not get paid, this is a great way for he or she to compensate their time wasted. You can offer them 10% of your profit if the clients follow through and purchase a property from you. I think its worth 10% of my profit, if I constantly have people calling me who are dead set on buying a home. You will also establish a great relationship, create a win-win situation, and have someone who will always assist you at the drop of a hat.

Business Cards

You are in fact starting a business and need to look professional. Nobody wants to go in to a contract with someone who appears to not have a clue as to what they are doing. Just get yourself some nice business cards for personal use, and be sure to give some to your realtor to generate leads.

Setting up a Corporation

At some point you will need to set up a corporation to protect your personal assets and save on your taxes. I recommend you contact a tax attorney to assist you with setting up your corporation.

Now that you are focused on what exactly you are going to do, its time to get going. There will never be a good time in your life to start investing in real estate. I think you better start now before things get worse. I think once you get out there building your team and setting up the foundation for your new business, the rest will fall in to place.