“Investing in Real Estate with Lease Options and ‘Subject to’ Deals” by Wendy Patton is a reliable new book about profiting with lease options and taking title to houses “subject to” their existing mortgages. Starting at age 21, Patton has been profitably buying and selling houses using the techniques she explains in her new book.
Having personally used lease options to buy and sell many houses for more than 25 years, I was especially interested in what this very knowledgeable Michigan investor reveals about her techniques. I learned they are remarkably similar to mine, although she has several different twists which overcome potential drawbacks.
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Patton doesn’t hesitate to share the potential pitfalls and how to avoid them. Heavy emphasis is placed on finding and creating lease options and “subject to” home purchases. She explains the signals of motivated home sellers and how to work with Realtors to find these bargain properties.
Considering the author has five children, it is amazing how she finds time to buy, manage, and profitably resell dozens of lease option and “subject to” houses. Along the way, she explains how she manages her business, minimizes problems, and even puts on seminars and boot camps for investors who want to learn her techniques.
However, the book is not perfect. Patton does a superb job of explaining details of the contracts and paperwork she uses to avoid misunderstandings with her sellers and buyers. But the book would have been much more valuable if she included samples of the documents she uses.
Although the author lists the dozens of important clauses she includes in her contracts, it will take hours to list all those clauses and put them into a purchase contract, lease-option agreement, rental agreement and other forms she recommends. Even if the next edition of this valuable book is priced much higher, including the sample forms Patton uses will at least double the book’s usefulness to readers.
The book thoroughly explains the pros and cons of both lease options and “subject to” home purchases. The author emphasizes that only a small number of homes can be bought using these methods, but at profits of $20,000 or higher per house she has more than she can handle.
Both buying and selling houses are heavily emphasized. But the author also holds some homes for long-term rentals, although she doesn’t explain much about those rental properties. Perhaps that’s the topic of her next book.
The book’s basic premise is to simplify buying and selling homes using lease options and “subject to” sales with minimum cash required. Patton does an admirable job, with the glaring deficiency of failure to put in one place the essential contract forms she uses.
Chapter topics include “An Introduction to Lease Options and Subject-to Deals”; “Finding Motivated Sellers for Lease Options and Subject-Tos”; “Evaluating the Profitability of the Deal”; “Negotiating the Deal”; “Getting the Paperwork Ready for a Lease Option Deal”; “Getting the Paperwork Ready for a Subject-to Deal”; “Building Rapport and Sharing Lease Options with Realtors”; “Finding and Qualifying a Good Tenant-Buyer”; “Managing the Property and the Tenant-Buyer”; “Closing: The Big Payday”; and “Where to Go from Here: A Step-by-Step Action Plan.”
Although Patton does an admirable job of discussing the pros and cons of lease options and subject-to home purchases, the book falls short on giving the reader enough confidence to acquire his/her first property using these methods. Sample forms would have solved this big problem. However, except for this fault, the book is so practical and valuable, on my scale of one to 10, it still rates a solid 10.
“Investing in Real Estate with Lease Options and ‘Subject To’ Deals,” by Wendy Patton (John Wiley and Sons, Hoboken, NJ), 2005, $19.95, 244 pages; Available in stock or by special order at local bookstores, public libraries, and www.amazon.com.
(For more information on Bob Bruss publications, visit his
Real Estate Center).
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