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How to Acquire over 100 Properties in 24 Months Utilizing the Lease-Option Strategy

Bob Scott and Jimmy Vreeland, who are SFR lease-option investors that have secured over 100 distressed properties, most being purchased at 30 to 40 cents on the dollar, are two of many speakers who will be presenting at the 1st annual Best Real Estate Investing Advice Ever Conference in Denver, CO February 24th to 25th.


I interviewed Bob and Jimmy on my podcast late last year and they provided their Best Ever advice, which is a sneak preview of the information he will be presenting at the conference.


What was Bob and Jimmy’s Best Ever advice? They explained how they were able to acquire over 100 properties in 24 months utilizing a lease-option real estate investment strategy.

What is a Lease-Option?

According to Wikipedia, in a lease-option, “a property owner and tenant agree that at the end of a specified rental period for a given property, the renter has the option of purchasing the property.” This lease-option real estate benefits individuals who cannot qualify for a traditional mortgage loan. And due to the financial crash in 2007, an estimated 80% of the current buyer’s pool couldn’t qualify for a mortgage, so there was an extreme need for other purchase options.


The main two reasons why these individuals are unable to qualify for a loan are (1) low credit scores or (2) not receiving a w2 paycheck. Jimmy and Bob stated that most of their lease-option tenants have more than enough monthly income to qualify for a loan, but they are just lacking in the credit or paperwork department. These are individuals who have the ownership mentality – they want to be a homeowner – and by giving them the lease-option, Jimmy and Bob are providing them with an avenue to do so.

How to Find Tenant-Buyers?

Jimmy and Bob find their tenant-buyers for lease-option real estate deals by listing their properties in three main ways:



vFlyer is a syndication site that automatically sends out listings to over 20 different websites, including Zillow, Trulia, and Yahoo Real Estate, which is a huge time saver.




They find that Craigslist is still a great source to find tenant-buyers.




They post simple Facebook ads and, as a result, their phones ring off the hook! The marketing message is simple – “Lease-option, rent-to-own, bad credit is okay, no banks required.” When a potential tenant-buyer clicks on the Facebook ad, it sends them to a simple, clean, no distraction landing page, which has a two-step opt-in form, requiring their name and email. In the second step, the tenant-buyer will provide additional information, including how much they can put down, how much they can afford monthly, and the type of property they want.

How Long are Lease-Option Contracts?

Jimmy and Bob’s typical lease-option is 12 or 24 months because most people’s credit situations can be corrected in that time. On day one, after signing up, the tenant-buyer meets the mortgage broker and credit repairperson with whom they will be working. The goal is to have the tenant-buyer hit “The Four Pillars of Improving Credit” so that they can qualify for a mortgage loan and exercise their option to purchase at the conclusion of the contract.

The Four Pillars are:

  1. Cleaning up past credit issues
  2. Getting a checking account
  3. Getting a secured credit card
  4. Reporting the tenant-buyer’s on-time rent payments to the Credit Bureau for them using a service called Rental Karma

If the tenant-buyer hits those Four Pillars, they should be able to qualify for a loan within a year.

Example Lease-Option Scenario

Jimmy and Bob recently purchased some lease-option real estate for a total investment of $60,000. Four days later, they had a tenant in the property. The tenant signed a 12-month contract that required them to put down an $8,000 nonrefundable option deposit and to pay $1,500 per month in rent.


Using this example as context, here are the 3 main benefits of lease-option real estate investing over being a traditional landlord:


1.Nonrefundable Deposit


If Jimmy and Bob would have gone the traditional route, they may have gotten a refundable $1,200 security deposit, instead of the $8,000 nonrefundable deposit. Receiving $8,000 on day one on a $60,000 investment means they’ve already achieved a 13% return!


The nonrefundable deposit also serves as the tenants “skin in the game.” It incentivizes them to pay their rent on time and to honor the contract. If the tenant does walk away or needs to be evicted, the higher nonrefundable deposit mitigates Jimmy and Bob’s risk against those or similar situations.


1.Demand Above-Market Rents


Jimmy and Bob may have only gotten $1,200 per month going the traditional route, instead of the $1,500 a month with a lease-option real estate deal. Since they are targeting that 80% of the market that very few investors are talking to, they are able to get above-market rents. The difference between $1,200 and $1,500 a month is $3,600 a year in additional income.


2.Tenants Responsible for Ongoing repairs


In a lease-option situation, the tenant-buyer is responsible for ongoing repairs and maintenance. This not only increases the cash flow but also benefits Jimmy and Bob from a time management perspective. If something goes wrong in a traditional rental, you have to field that call from the tenant, figure out the issue, and coordinate to send a handyman or contractor out to the property. Many times, the tenants miss the appointment, so you have to coordinate with the handyman for a second time. Then, you get a call back from the handyman telling you the issue and the cost. However, Jimmy and Bob eliminate that entire time-consuming process by having the maintenance and repairs be the tenant-buyers responsibility.


Lease-option real estate is when a tenant signs a contract with a property owner and has the option to purchase the property either once it expires or once they qualify for a traditional mortgage.


When Jimmy and Bob have a property that needs to be leased, they find the majority of their lease-option tenants using vFlyer, Craigslist, and Facebook ads.


Lease-option contracts are usually 12 to 24 months in duration. Once the tenant achieves the “Four Pillars of Improving Credit,” they will qualify for a loan and be able to exercise their option to purchase the property.


The three main advantages of lease-options over traditional buy-and-hold investing are larger and nonrefundable deposits, above-market rents, and tenants are responsible for ongoing repairs and maintenance. Just remember to get all of your agreements with the tenant in writing!


For other types of rental properties, such as apartments, read more here.

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