Marketing For Lease Option Sellers

Thanks for your response Drew. Hey I've found a few sellers in the "For Rent" ads that stated they would consider a L/O.

How do I get them to understand that I won't be the T/B, but my T/Bs will be the prospects to live in their house. I told them how it works and the benefits. After I tell the sellers this, they seem to shy away from the idea.
Is there something else I should tell the FRBOs to sell them on the L/O deal with my T/Bs?

Thanks,

Happy Investing!
DG DealMaker

If you start out in the very beginning telling them you are an investor and you have clients who are both buyers and sellers and that you match up what the sellers have and the buyers are looking for, they already have the seed in their minds.

Evidently, you are not making this plain in the beginning.

It sounds like they are feeling like they are being deceived with a "bait and switch" type deal. I'm not saying you are doing that. It (L/O) is already a concept that is unfamiliar so they are probably tentative then when they start feeling like "OK, maybe we can try this..." and then you spring a stranger is entering the mix. Try putting it out there in the very beginning and I'll bet things change. People don't like surprises in business deals.

Karen

I forgot to respond to this part. If the FRBOs are not motivated to be "sellers" this concept does not work with them. The key term is "motivated seller". It is not an ideal situation (loan is still in their name) so it has to be a better situation for them. If they like having rental property "NEXT".

Karen

just a reminder and to add to what karen stated, if the frbo's aren't looking to sell maybe they wanna buy. either way they could make one of your lists.
keep moving forward, rob

Hi Karen

I first asked the seller/landlords, "would they consider doing a lease option". If they said yes, then I told them that I had T/Bs that may be interested in doing a L/O on their property.

My thinking was to first see if they wanted to do a L/O and that it made no sense to tell people I had T/Bs first if they had no interest whatsoever in doing a L/O with T/Bs.

I think I may hold off on using the word "investor", because it draws a lot of distrust and skepticism.

Also, I know that some seller/landlords, if they know you are going to make a profit in the transaction will not do the deal.

I will have to try and think of a way to state it clearly, the message that you listed below, for the sellers/landlords to understand:

..."telling them you are an investor and you have clients who are both buyers and sellers and that you match up what the sellers have and the buyers are looking for"...

So maybe I'll tell them somthing like, "would you consider doing a L/O and that I have T/Bs that may be interested in doing a L/O on their property".

Thanks!
DG_DealMaker

My answers are in CAPS in the msg above.

Karen

everyone seems to have a lot of good advice..mine is to never give up keep asking,searching,learning..and you will always come out on top..

Just another thought You can do a Assigment on a Lease option.

This is were you find a Motivated seller and Find them a client and give them your list one at a time. You will charge a fee for you clients name witch could be any were from 2 to 5 Thousand. This way the owner is making the profits and you are making and 1 time Assignment fee with no headacks.

Jay C

I find that FSBO and FRBO have no problems with the term "investor", especially because we are there to solve one of their problems: getting rid of their property. Of course, not everybody wants to do a L/O for a lot of valid reasons; but there are so many properties out there, you just say "next!"

Just make sure the terms are your terms as you are the one that has to live with the contract.

The best seller for lease option startegy is someone behind on their payments and facing foreclosure. You can save their credit, keep them out of foreclosure and possibly put them into one of your other houses, one that they might be able to afford better.

That is sooooo true. But you need to justify what you do and don't worry about the other lowballers.

I LOVE this!

NO means MAYBE, MAYBE means YES, and YES means RIGHT NOW.

Karen

Isn't that the same line you girls taught us boys early in our dating ritual? LOL

I avoided the term "Investor" because many sellers/landlords reply back, "they will not sell to an Investor".

In several states the Attorney General has really come down on investors scamming sellers so now the term "Investor" has a bad name. In some states it's illegal for Investors to directly contact sellers in preforclosure without going through a Realtor.

DG_DealMaker

some times you have to put it in a different perspective for the seller. For instance, if you call a seller and right out of the gate you ask, "would you be interested in a lease option?" A lot of times, people are hesitant to get involved in something they don't know. Better to take some time and establish a rapport with the seller and then say "If I leased the house from you for a year and took care of all the maintenance, would you consider putting the sale off for a year?" After they have accepted the concept, then you can explain it in detail to them.

Would it be possible for you to name those states?

And I agree with the post above from TRSD. Rapport is an important tool in any investor's toolbox. Good comments

I know that Maryland was one of the first states to inact anti-investior laws and well known for it's strict laws with hefty fines and even jail time against real estate investors that violate these laws. Some of the local REI Clubs advise investors to have a real estate agent to contact homeowners for them in pre-foreclosure, since agents are exempt from the law. Since these laws came out now when homeowners hear the word "investor" they run for the hills.

You may want to do a Google search for a complete list of all the current state laws.

Below is a Free Resource regarding lease options

http://thefrustratedinvestor.com/

Thanks a bunch lady. It is the small things that can make a huge difference, and knowledgable investors like you can and do show us "grasshoppers" the way!

Thanks Karen

The comments were very good but not quite as good as your comment to Karen about girls teaching us boys. You probably never got a "no". Lol

Bill is always a character! Very knowledgeable and generous but always a character! But luckily, he's OUR character!

Karen

I done one of these after many attempts. I realized these components have to be in place for you to get a deal. 1. The seller has to be motivated in these ways a) has two mortgage payments because he has another house b) facing foreclosure and you come in save his credit. 2. The mortgage payments have to be less then what the house would lease for. If the mortgage payment is $1000 but the house would only rent for about $800 , very few owners want to come out of pocket, 3. The house has to be in livable and good condition and not in a crime area. You don't want repair issues arising or people afraid to move in that beighborhood. My 2 cents .

Hello , I have a great Real Estate Agent sending me the MLS listings every week. Now, my question is how do i get to talk to the home owners ? there is not a phone number provided, and all i can do is send them letters through the mail. Is this the only way ? Or would my Real Estate Agent have the information and she can call them on my behalf and ask them herself, and not divulging the private information to me because that may be against the rules of her license. Not sure. Any ideas ? or should i just stick with putting out bandid signs for sellers ?

Tamara

Tamara: Yea, letters have not worked yet for me. Some of them are in the phone book though. Try Realtystore.com

Andrew

Would anybody like to work the Tampa area with me. I am a Realtor and am looking for a partner that also enjoys walking through walls. Please see this morning's article from the St. Pete Times, Tampa Bay home prices plunge to new low. Obviously a fertile area.

I would like to complete 25-50 transactions by the end of this year!

WASHINGTON — Home prices in major areas, including Tampa Bay, have reached their lowest level since the housing bubble burst in 2006, driven down by foreclosures, a glut of unsold homes, and the reluctance or inability of many to buy.

Prices fell from February to March in 18 of the metro areas tracked by the Standard & Poor's/Case-Shiller 20-city index. And prices in a dozen markets have reached their lowest points since the housing crisis began. Prices in March rose only in the Seattle and Washington, D.C., metro areas.

The nationwide index fell for the eighth straight month.

The 12 cities now at their lowest levels in nearly four years are Atlanta, Charlotte, Chicago, Cleveland, Detroit, Las Vegas, Miami, Minneapolis, New York, Phoenix, Portland, Ore., and Tampa.

The Case-Shiller index measures sales of select homes in those cities compared with January 2000. For each of the areas it reviews, the index provides a three-month moving average price. By measuring the sales prices of the same homes over time, the index seeks to gauge market values and conditions.

After checking with sellers in default, it turns out that in Calif., Realtors are actually sending out letters to homeowners in default warning them not to respond to investors. It is funny though 85% of those end up at auction, because the agents can not get them sold in time.

Andrew S

Here are some issues with homeowners in default.

Most are too far upside down to make a lease option workable and their cure amount is to high for a feasible option payment. These should become short sale leads, unless they are already listed. If so don't waste anymore time, go on to the next lead.

Personally, I don't really work pre foreclosure people for potential lease/options because 99% are in the situations listed above.
I market to and look for motivated sellers that are NOT behind on payments. They are moving, divorcing, tired landlords, have 2 payments ETC. These types of situations can work with a sandwich lease/option strategy.

Just like any REI acquisition strategy you will go through A LOT of leads to get a deal. A LOT! When you get one it will be worth it.

Michael Mangham
MD Home Acquisitions LLC

Michael, Thanks for your advice. I do know another investor who has had good luck though with owners upside down.They are sometimes motivated if you can convince them you can protect as well as build their credit. The website I use tells me how much in default they are and apox. what the house is worth today.
So I can tell if the numbers will work. The only thing is I am not sure if it can tell me if there is another loan or not.

Andrew

What has worked for you if i may ask...me and my husband has run into a wall it seems. Has Bandid signs worked for you the most ? or something else ?

Tamara

Andrew,

Most pre foreclosure people ARE motivated. But when they owe 6 months of mortgage payments and attorneys fees AND they are upside down, I don't care how motivated they are. A $20,000 option payment just does not work where I am. More like $5,000 to $7,500 tops. Most people in foreclosure owe more than that (around here)in order to cure the foreclosure. The numbers simply don't work most of the time. On top of that, current home values are dropping in most areas. You must buy right if you want any cash on the back side. I just don't waste time pounding a round peg into a square hole. The market may change (it always does)but for now I will spend my time looking elsewhere for motivated lease/option sellers.

Tamara,

I use bandit signs and they work for me for finding sellers. I hand out my cards everywhere. Word of mouth works good for us also. Several of my realtors will let me know if they have a possible lease/option person. I use Craigs list to find my tenant/buyers. I find 20 times more buyers than I do sellers!

Finding the tenant/buyer is no problem, finding the property that has the right numbers and a motivated seller is the hard part!

Good Luck!
Michael Mangham
MD Home Acquisitions LLC