Money-Rx Blog

Jeff Beaubien is Principal of Beaubien Investment Company, based in Howell, Michigan and also the owner of the website Lease2Purchase.com, where he hosts an online community of real estate investors, dispensing advice and tips. Beaubien has also compiled a comprehensive vault of information in his Lease 2 Purchase handbook, which takes a new investor step by step through the intricacies of real estate investments, outlining successful strategies for leasing, buying and selling property.
I will remember this particular series of events for the rest of my life. This is how it all began. As I sat in my office sifting through an endless pile of mail, I came across a notice from my company. It requested my presence at one of its all too frequent ‘morale boosting’ conventions. It seemed that my full-time job had switched from selling insurance to that of being a prisoner of my company. But even though I felt trapped, I knew I needed the job to pay the bills.

The next week, there I was sitting in a grand hotel ballroom with close to fifty other insurance agents from my company. I heard the speaker say, “…our controllers department has determined that a strategic rate increase is necessary throughout the territory. It will be implemented immediately…” As I looked around to see reactions, I saw that all of them seemed to have the same defeated look on their faces.

At that moment, I tuned the speaker out and began to daydream about how I could break free from working for someone else and become independent and wealthy on my own terms. I thought about the fact that I was smart and a hard worker. My mental wanderings took me back to the time when I bought my first home: At that time, I had $750 in the bank and a hunger to stop throwing money away on monthly rental payments. I had no idea what I was going to do. I just knew that I wanted a home and that I would have to get it for as little money down as possible. I remembered glancing through one of my friend’s creative real estate courses that she had ordered on television. The course presented the features and benefits of lease purchase contracts. I recalled that if money was an issue, a lease purchase contract could be the key. And it was. It allowed me to open the front door of my new home.

For two weeks I searched unsuccessfully through the classified ads looking for homes being sold on lease purchase contracts. Then I decided to change my tactics and become proactive in my search. I began to approach sellers and discuss with them the advantages of selling their house using a lease purchase agreement. After a week, I found the right seller. He had just purchased another home in a nearby town and could no longer afford two mortgage payments. He didn’t need much cash, but he was motivated to sell his home. Perfect! I offered him full price for his home if he would lease purchase it to me for six months. This allowed me time to save for the rest of the down payment. Furthermore, I asked him to give me a $400 credit per month towards the purchase of the home. Much to my surprise, he agreed! I saved as much money as I could, and six months later I closed on my first home. I sold it two years later for a profit of $15,000 and bought another home closer to my office.

My daydreaming was interrupted and I was back at the convention. The speaker was concluding, “… thank you for attending, and …" I walked to my car and drove home with a burning desire to be free. If I could do it once, I could do it again. My plan for freedom would deal with real estate in one form or another. I just didn’t know exactly how - yet.

A month later I had a half-completed business (freedom) plan, but it was sitting in my “to do” file gathering dust. I didn’t have time to finish it. There was too much work to do in the office: stacks of paperwork, endless telephone calls to make, visits from customers complaining about rates over which I had no control. I was totally frustrated.

Then one day my mother invited me home for dinner. She was aware of my desire to invest in real estate. Little did I know that she had a hidden agenda. (My mom likes doing stuff like that). She wanted to introduce me to a friend of hers named James. He was soft-spoken, well dressed and appeared to be in his mid fifties. He asked what I did for a living. I told him that I was a disgruntled insurance agent. He told me that he was a full-time real estate investor. He continued, “I have owned hundreds of homes, apartment buildings and commercial buildings… and next week I am closing on a chain of several drug store buildings.” I couldn’t believe it! He didn’t look like a real estate tycoon, he didn’t talk like a real estate tycoon and he didn’t act like a real estate tycoon. I was struck by the thought that if this man could do it, then I could too! So I did.

Because of my past dealings in real estate, I knew that lease purchase contracts could work, and work well. I recognized that they could create win-win situations for both the buyer and the seller. And, I knew this could be a very good way to do business. So I went to libraries and bookstores to get as much information as I could on lease purchase contracts. I finally finished my freedom plan that focused on one objective: Make a ton of money in as short a time as possible using the lease purchase contract.

Unfortunately I wasn’t in good shape financially. I had only $1,000 in the bank and $10,000 in credit card debts. I was making just enough money to cover the bills. But as my mental wheels raced searching creatively for a solution, I recalled reading somewhere that if I owned a home, I had something called equity -- and equity was good! So I did a little research to find out what equity was. After some minor investigation, I discovered that I had potentially thousands of dollars sitting in my home. So I went to see my friend Sally at a local mortgage company and asked her if I could get an equity loan on my home. She examined my application, reviewed my credit report, punched some buttons on her calculator and two weeks later I had $20,000 cash in my hands. I immediately paid off my credit cards, spent some money repairing my home and put a significant down payment on a new car. And, I still had over $5,000 burning a hole in my pocket.

With my business freedom plan in one hand, $5,000 in the other, and a longing to live my life on my own terms, I negotiated control of six more homes in a nine-month period. One of the homes I bought and lease purchased to a tenant/buyer. Five of them I lease purchased from landlord/sellers and then sub-lease purchased to tenant/buyers. To my surprise, my net cost was less than $1.00 to control all of these homes. In fact, I actually made a profit up front. That $5,000 provided just the confidence that I needed to finally take action.

When the dust settled, I had more than $30,000 in the bank and my net worth had increased from virtually nothing to over $100,000. Today I am a full time real estate investor.

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