I recently purchased a new home in Salt Lake City for $210,000 including closing costs. I had $500 into the deal with the rest being financed. I lease-optioned the house and I cashflow neutral. After 5 months the tenant informed me that he's exercising the option. His exercise price is $232,000. After closing costs I net just over $20,000. On my $500 investment, thats a phenomenal 4000% return. [Over 8000% annualized.]
Here lies the power of leveraging and the beauty of real estate. No other investment allows you to borrow 90-100% of the the amount required to purchase the asset.
Of course, through my contacts with builders I was able to buy the house at a slight discount to market and through my research I was able to pick a market that is rising even though prices are flattening out or decreasing in popular investment places like California, Nevada and Arizona. Who said making money was easy?
