He Made $2k on His First Deal to Now Doing Lease Options with James Brown

From making a modest meager $2,000 On his first deal to mastering the complex world, the lease options. Today we’re going to be talking to James Brown about his journey in real estate. And let me tell you, it’s pretty freaking inspiring.

Today he’s going to share with us his story and insights of how he went from $2,000 to now he’s owning multiple properties. Welcome back to the channel, everyone.

My name is Nathan Payne. And in today’s episode, we’re going to be exploring the evolution of the real estate career of James Brown, of going and making dollars On his first deal to now owning multiple properties on lease options. So what the heck is a lease option? Well, stay tuned, we’re gonna explain it all. And James is gonna explain to you exactly how he got started. And now how he’s doing his strategy of working with lease options. But before we dive into the video, do me a favor and subscribe to the channel, because it would really help me to grow and get to his front of more people. So let’s dive right into this call. Check it out right here. Let’s talk about that first deal. You got you made $2,000 Tell us about how you got $2,000 on your first real estate deal.

Yeah, it was. So we focused on lease options rent to own and so it was a joint venture deal with my partner and mentor. It was an out of state deal not not in Colorado. So Minnesota and a lot of cool things about it. Basically, we brought our investor investor came in and bought a house for somebody that couldn’t get a loan. It turned out he was a real estate agent didn’t have its full two years to be able to get a loan he needed that track record.

And so he actually picked out a duplex was able to rent out one side and live in the other Okay, and within I think it was a year and a half he was able to get a loan walked into some equity like it was during COVID Things are going up and up and up and so we’re locked into equity our investor walked in Are you gonna make monthly income and a back end payday, so everybody’s happy and this agent he was able to buy a single family home for himself at the same time and turn that duplex into two doors, two rentals all it was in a year and a half. It was it was awesome.

Let’s break this down. So you got you made $2,000 How did you make the 2000? Was it from the the option on the lease? Like they have to put some money down in the beginning? Was that the option payment? Yep, they had to put some money down have some skin in the game. That’s why we like lease options. They’ve got skin in the game compared to a regular renter.

Right. Okay, so you made money on the option I’m assuming you split is probably 4k And you split it with your mentor,
he got more of a you know, he he went out and found the duplex and made the offer like he’s doing a lot of the work. Okay, we were just more of the connector. So okay, so you so this is how it works. He found the deal. And then it was was it on the MLS or do you remember? Yeah, I believe it was on the MLS and the buyer was, I don’t know how he connected with him, but he had the buyer. So okay, there’s value in that. Did he bide your mentor? Take it down and buy it with private money? Hard money? What did he end up doing? No, our investor bought it with Okay. Yep. Just alone. Okay. Yeah.

So the investor bought it on a loan, and then someone else, then you put someone else in there as a lease option? Yep. Yep. They just had a lease with an option agreement to buy and it was an agent and you’re saying the agent is the one that took over the as lease option? Yep, exactly. And what’s cool is he now helps, you know, my partner in Minnesota screen tenants because he’s been through the process as a tenant.

Wow. Yeah. Interesting. Okay, because I did hear about this company that does, they don’t they don’t think they take options. They don’t like take money up front, they just buy properties off the MLS for cash and then they do lease options. And then every year that you don’t exercise your option to buy it the price goes up and the rent goes up. I don’t know if you’ve heard of that. I can’t remember the company name.

There’s multiple companies and different ways in fact, I as an agent, I teach other agents through a continuing education class about this whole industry and how Yeah, well we can all do it and do it correctly. So that the end goal is that those people can become homeowners and right yeah, that’s not always the case. In fact, industry wide a lot of people don’t end up buying which is the oftentimes the fault of the company that didn’t screen correctly.

Yeah, yeah. Cuz you don’t want to take option their option money like their debt, whatever you can say it’s Can you say it’s a down payment or not really, option payment, it’s a non refundable option consideration is the emoji, they can use that if you if you’re giving them credit for that money they put down they can use that for down payment and closing costs, right? But if they don’t qualify, then they kind of lose it pretty much it’s non refundable, non refundable, right? And if you don’t if you say hey you have a lease I’m giving you a lease option you can you exercise your right to buy this in a year but you you get you bring someone there you know they’re not going to qualify in a year you’re pretty much are you saying that’s kind of the shady not shady but that’s like where could go wrong if you’d like take a big option payment but you know, they can’t qualify, right? Yeah.

And so like, screen them well looping in a lender In the beginning to really figure out like, where are they now? What’s it going to take to get to them to? And then also figuring out how much time to give them? Because like, we start with them first if they need a year, let’s give them two. So the backs not against the wall, maybe three years, you know, we’ll do up to 10 years actually, for sure. So so do a lot of people do this where they will buy a property on a on a traditional like FHA or conventional loan and then sell it on lease option. Yeah,
I don’t know how many people are doing it individually, like, like we are. Because like that company, you’re talking about the price have a big fun behind them.

Oh, man, they probably Yeah, they do it. I think they have like, over like 15,000 homes. Yeah, yeah, yeah, black rocks behind one of them in the right. Cash, and keeping those cash not putting loans on it. We like to put a loan on it, and leverage that, you know, make an investor can get multiple deals by leveraging. So that was your first deal that you did. And then you’re you’re continuing and progressing and doing it more and more. Is that right? Yeah, exactly. We’ve done multiple joint ventures with our partner and and then I’ve done them on our own myself and Toby, my my business partner here in Colorado.

Oh, cool. How long have you been doing this? For everybody that’s watching and how did you start? Just recently, have you been in for a long time?

This is year three.

Okay. So your year three? Are you doing full time now? Yep. Wow. Okay. So where are you able to find most of your properties? You’re able to do lease options for most of ours in the past have been out of state outside Colorado? Why is that we just those joint venture deals, you know, our partner had the buyer already in the Midwest, some others came through my brokerage exp, you know, I’m pretty well known throughout exp for doing this. And so I’ll have people come to me like, hey, got somebody that can’t get qualified? What can you do? So Gotcha. Yeah.

When you say you have your your investor, your buyer, and he’s he’s he’s the one that’s coming in with the getting the loan? Is that what’s happening to the buyers? There’s, there’s a the resident or tenant, the end buyer, and then there’s the investor who’s a buyer in the beginning.

Right. And is that which one is the most difficult one to find? Finding good tenant buyers or resident buyers? I like to say residents, right? That’s harder to find, because there’s a lot of people that can’t get loans, right? Of course, yeah. Especially right now. Right? Yeah, it’s getting harder and harder. There’s more programs, but their guidelines are pretty, pretty tight. So where are you fine? Where are you finding? Sorry to interrupt? Where are you finding these? These tenant buyers?

Most of them are through relationships I have in the industry, people that run across people that can’t get qualified. So
what’s your outlook on? What will happen to that? Do you think they’re just going to take away buyers commissions? What do you think on that? Yeah, you know, I think what it’ll end up being is like, you know, say a purchase price without having the buyer’s commission is 300 grand, or whatever that number is, the buyer agent would still get paid out of the equity of the house. And they just add that on to that final purchase price. Interesting. So there’s the seller would still be be paying that. I don’t know how buyers are going to come up with that money.

Yeah. What are your thoughts on I think buyer’s agents provide more value in my opinion than a listing agent, because the listing agent just puts it on the MLS most of the time and just waits for people to reach out? Right. And he’s facilitates that. Do you agree? Or do you think buyer’s agents are less valuable?

Well, yeah, there’s a lot of work driving around opening doors for buyers agent once once they have the property and make an offer then it’s there’s a lot of things going on in the background. Both are doing Yeah. negotiation. That’s, that’s, that’s a big part of it. Like a lot of buyers and sellers think they can negotiate but mostly been trained and know what other professionals know, kind of at a disadvantage, like, like going to court or something. I’m gonna represent myself. That usually doesn’t work out.

Yeah, you don’t know what you don’t know. Right? Yeah, exactly. Very interesting. Well, hey, dang, bro. So you went from 2k on your first deal to now doing lease options and knowing all this stuff about being a real estate agent and being involved in EXP and being the go to guy if you aren’t, you can’t qualify for a property you help people get in through lease options, is that what’s going on? Exactly?
What’s cool too, is like I’m helping other agents and lenders.

Lenders love this too, because they can get a loan from for the investor and for the buyer in the future. They got one in the pipeline. So that’s what’s cool is like I’m able to help a lot of people in their business and get people into homes that normally couldn’t or would have to wait, you know, what do you think of the call? Do me a favor and leave a comment and I’ll respond to you because I am interested to see what your feedback is. I’ll see on the next one.


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