Deedless Real Estate Investing-An Overview

Are you looking to increase the number of real estate deals you can do without significantly increasing your risk and without increasing the amount of cash or credit you need? If so, then deedless real estate investing may be just the strategy you?re looking for.

Deedless real estate investing is a collective term used to describe a group of tactics that do not involve an immediate transfer of ownership of a piece of property. Among these tactics are straight lease option, sandwich lease option, and subject to.

The first of these, the straight lease option, describes an agreement between you the investor and the seller in which you lease (or rent) their property for a monthly payment, and you have a guaranteed option to buy the property at a predetermined price within a fixed period of time. Ownership does not change hands unless and until you exercise your purchase option, making this the first type of deedless real estate investing.

The second type of deedless real estate investing, the sandwich lease option, starts out as a straight lease option. You then, as the tenant buyer, would find a second tenant/buyer to assign your interest in the property to. They would lease the property from you, with the option to buy it from you. When and if they exercise their option, you would in turn exercise your option to buy from the original seller. This puts you in the middle of the sandwich, where you stand to profit with little or none of your own money at risk!

Finally, the third tactic for deedless real estate investing is the subject to, which means you buy the property subject to the existing mortgage or deed of trust remaining in place in the seller?s name- you simply start making the payments. Some investors actually do insist that they get the deed when doing a subject to deal, but they don?t record the deed until they resell the property and cash out the seller?s loan.

Other subject to investors don?t get the deed, waiting instead until they find a buyer who exercises their option and cashes them out of the seller?s loan. Doing it this way makes this a true deedless real estate investing tactic, but significantly increases the risk. I don?t recommend it!

We have barely scratched the surface of what could be said about these three tactics for deedless real estate investing, but now you have an overview. Add these tactics to your real estate investing toolkit, and more deals will be available to you.

Now, go make more offers!

Real Estate Investing: Triple Net Lease

A net lease refers to a lease agreement where the lessee is responsible for paying the property taxes, maintenance, insurance, for the utilities and for the janitorial services. Of the net leases, the most common type is a triple net lease.

Triple Net Lease or NNN Lease: A triple net is also known as a NNN lease. As per a triple net lease, the tenants are responsible for operating and maintaining the property as well as the common area maintenance, which will be divided among the tenants in proportion to the area they rent. The landlord is responsible only for the structural integrity of the building. The tenant pays the landlord a base monthly rent and is responsible for the maintenance and the operational costs of all utilities as well as that of the property. The tenant has a few legal defenses to relieve him of his responsibility while using a triple net lease.

Absolute Triple Net Lease: It is also referred to as a bond lease. It is similar to a NNN lease, but differs in that the tenant has no legal defenses if he fails to meet his responsibility of paying the maintenance and operational costs, property taxes and insurance, utility and janitorial expenses etc.

Investors dealing in commercial real estate look out for multi-tenant properties that have triple net leases, as all they have to do is deal with how to invest the rent paid by the tenants. They like properties with triple net leases as they are not bothered by management obligations and have an assured income. On finding such a property, they have to take extra care with the due-diligence and study every document relating to the building as well as study the lease agreement in detail seeking the counsel of an experienced attorney.

Triple net leases have to be carefully drafted to compensate for inflation as well as tax increases, which could influence the rent and thereby affect the lease. The landlord should be very careful in selecting tenants by checking their credit worthiness, the type of business they do and how it will have a positive or negative impact on the property has to be analyzed carefully. If an investor is buying a property with a triple net lease tenant or tenant, the lease agreement has to be carefully scrutinized and the lease term has to be checked, and then carefully reviewed to see if the existing tenants would agree to an increase in the base rent as well as check the credit worthiness of the tenants. It is an investors dream to land a multi-tenant commercial property with a true triple net lease but they are a rarity.

There are firms that offer services and products to help new businesses succeed.

Deedless Real Estate Investing-An Overview

Are you looking to increase the number of real estate deals you can do without significantly increasing your risk and without increasing the amount of cash or credit you need? If so, then deedless real estate investing may be just the strategy you?re looking for.

Deedless real estate investing is a collective term used to describe a group of tactics that do not involve an immediate transfer of ownership of a piece of property. Among these tactics are straight lease option, sandwich lease option, and subject to.

The first of these, the straight lease option, describes an agreement between you the investor and the seller in which you lease (or rent) their property for a monthly payment, and you have a guaranteed option to buy the property at a predetermined price within a fixed period of time. Ownership does not change hands unless and until you exercise your purchase option, making this the first type of deedless real estate investing.

The second type of deedless real estate investing, the sandwich lease option, starts out as a straight lease option. You then, as the tenant buyer, would find a second tenant/buyer to assign your interest in the property to. They would lease the property from you, with the option to buy it from you. When and if they exercise their option, you would in turn exercise your option to buy from the original seller. This puts you in the middle of the sandwich, where you stand to profit with little or none of your own money at risk!

Finally, the third tactic for deedless real estate investing is the subject to, which means you buy the property subject to the existing mortgage or deed of trust remaining in place in the seller?s name- you simply start making the payments. Some investors actually do insist that they get the deed when doing a subject to deal, but they don?t record the deed until they resell the property and cash out the seller?s loan.

Other subject to investors don?t get the deed, waiting instead until they find a buyer who exercises their option and cashes them out of the seller?s loan. Doing it this way makes this a true deedless real estate investing tactic, but significantly increases the risk. I don?t recommend it!

We have barely scratched the surface of what could be said about these three tactics for deedless real estate investing, but now you have an overview. Add these tactics to your real estate investing toolkit, and more deals will be available to you.

Now, go make more offers!