Need Lease Option Help - Baddddd! - Posted by Craig

Posted by Mike G on January 23, 2003 at 12:53:06:

Craig, I’ve never sold a house on LO, but I do have an opinion about your ads. Personally, I think you should drop the price and instead say something like “only X down and X a month.” That’s really all anyone who has credit problems cares about. And after all, that IS the real benefit to them right? I mean otherwise they’d just buy straight up w/ no need to LO.

Nobody understands how LO’s work. Your price may be scaring them away (“oh I could never afford that”).

Also, how does your asking rental price compare to other rents in the area. On first glance, it looks like it may be a little high considering other houses in the neighborhood’s PITI are in the 800’s (remember, most people don’t even break even when renting out their place until after a few years…I do realize that LO commands a slight premium, but I would be that market rent may be closer to somewhere b/tw 800-900).

Again, just my opinions. I’d certainly listen to those who are more qualified than I first.

Need Lease Option Help - Baddddd! - Posted by Craig

Posted by Craig on January 21, 2003 at 07:25:11:

Need help on first lease option deal here in Charlotte, NC. We can not find anyone remotely interested in leasing to own the home. It is a pretty house in a nice area in great condition. We are somewhat negitioable on the down payment and monthly rent. We run the LeGrande classified ads to attract buyers but few can meet the minimum down payment and rent. We took it wholesale subject to and are committed to our 3rd payment come Feburary plus some additional assignment fees once we get a T/B. Should we lower the upfront and rent below minimum to stop the bleeding? Need some good marketing tips - fast.

Thanks in advance for your assistance.

Re: Need Lease Option Help - Baddddd! - Posted by Jim

Posted by Jim on January 21, 2003 at 23:57:19:

Craig,
As others have indicated, we’d need to know some more info first.
What are the numbers?
What is market rent for the area?
What are you asking for rent?
Does the house need anything?
When people see the house, what are they saying about it?
Getting feedback from potential T/B’ers is a good idea.
you might just find it is something simple.
I had a house once that was really nice, custom decorated and all.
The main comment the first two weeks of showing it was that the kitchen was painted a kind of off green color, and no one liked it.
We spent one day, painting over this with some egg shell white, and the house sold 3 days later.

Now, as far as your marketing, what are you doing?
What does your ad say?
Is that the only thing you are doing?

If the terms are good, and within local market numbers, and the house is nice and ready, then perhaps more people just need to find out about it.

Here are a few things I do when selling a house with a lease option.

  1. Sign in the front yard, “For sale, Rent to own, Bad Credit Okay! Call xxx-xxx-xxxx Today”

  2. Signs in the front windows of the house, saying the same thing, and LARGE, so they can be read from the street. This is really backup, should the yard sign get taken down, or go AWOL.

  3. A flyer tube in the front yard, laying out some details about the house, and the monthly amount wanted.
    then a number to call for more info.

  4. Flyers on the inside of the windows, as well as on the outside of the door, putting tear off strips on that one. Same type of thing as in the tube.

  5. A flyer pasted to the inside of the front windows that outlines your program of “Rent to own” and how it works.

  6. Directional signs pointing to the house. Get these on the streets leading to it, and at major intersections leading to there.
    I make my own, using corrugated plastic signs, with an arrow that read, “–RENT TO OWN–>” and point to the house. I even ask neighbors to place them in their yards, and keep an eye on them for me, so I can market hard and find them a good new neighbor, instead of a vacant house.

  7. Flyers, in color, with a picture of the front of the house, some details about the house, the monthly amount, and with the words, RENT TO OWN, very large accross the top.
    Place these anywhere you can. Bulletin boards everywhere, laundrymats, apartment complexes, grocery stores.

  8. Make a flyer that says, “Pick your new neighbor”, and pass info along to those living nearby.
    They might want to refer a friend or family member for a small fee.

  9. A flyer to local mortgage brokers, you can pass these out or fax them. Saying something about, "Don’t throw away leads that are not qualified now, but can be in a few months…then tell them about your deal, and how you will refer the buyers back to them for a loan later.

  10. Relocation services, or human resource departments at major employers in the area.

  11. Signs around town that say something like this:
    RENT TO OWN
    Bad Credit Okay!
    Area-Nice 3Bd/2Ba
    $xxx/month
    XXX-XXX-XXXX

These work well for me. I usually make up 10-12 of these per house and get them out. Some stay up quite long, and I’ll get calls from them months later.
When this happens, we just say, “Well, that house sold, but we have this one with these numbers available now.”

  1. Flyers on cars. Some people hate these things, and you will get some angry calls, but they work. I make up a half page flyer and then have some highschool kids I know place them under the wipers of every car at the mall, the movie theater, the larger discount department stores, like Walmart etc, and the strip malls as well.

If you do these things, and keep doing them, the house should sell faster.

I’ve sold my last several houses from signs, either directionals pulling people in, or the road side ones with a house for sale “REnt to own”.

Good luck, HTH,
Jim FL

Re: Need Lease Option Help - Baddddd! - Posted by Crickett (Seattle)

Posted by Crickett (Seattle) on January 21, 2003 at 16:54:00:

Last time I heard Randy & Charlie France, they talked about how all the gurus they’d listened to always said to get 5% down, but that they weren’t finding anyone with that kind of money where they were investing. They said they talked to Ron LeGrand, one of their mentors, who said that when it comes down to it, who do you want to be making that next payment, you or a buyer?

If you’re not getting candidates with the kind of cash you WANT, and it’s getting down to the wire, maybe it’s time to be more flexible, and start looking at what you NEED.

I’ve heard several people talk about getting a good reliable T/B in, and making sure that the intitial lease states clearly that the rents will be raised each year by X% or $X, so that even if you don’t have cashflow the first year, you will the 2nd year, and each year thereafter.

As for marketing, are you only advertising in the paper? Are you also putting up signs at the house, with directional signs from every direction? Charlie said that her houses look like the circus is coming to town! They use a minimum of 10 signs on each house that is up for lease-option.

Crickett (Seattle)

What specifically does your ad say? - Posted by Shawn J. Dostie

Posted by Shawn J. Dostie on January 21, 2003 at 11:51:14:

I have had the most success with this exact ad. “Owner will finance NO BANKS” XX BR XX Bath Call (XXX)XXX-XXXX
Sometimes I’ll add the address. I don’t know anything about the home and that piques me enough to ask you more. That is what you want from your ad. I don’t believe you need the address, amount down, and monthly payment. With all that info. why do they need to call? Besides if you are a dedicated Creative real estater, you can be FLEXIBLE on terms, especially as your expenses are steadily rising. Try to remember to not be to rigid in your demands.

Good Luck,
Shawn(OH)

Re: Need Lease Option Help - Baddddd! - Posted by Jennifer

Posted by Jennifer on January 21, 2003 at 08:16:36:

I usually have the opposite reaction-- too many people wanting to lease to own.

WHat are the numbers? Is the monthly rent equal to rents in the area? Or at least close?

What are u asking for a down payment?

You said you placed an ad…are you checking credit history?

Give me some more info and maybe I can help…

Re: Need Lease Option Help - Baddddd! - Posted by Craig

Posted by Craig on January 22, 2003 at 24:02:10:

Thanks for the response. Here are the numbers and the ads we have run so far. Just this past weekend I put some directional signs up. Hoping that drives some traffic too.:

Actual ARV: $128,000.00
Selling on L/O for: $136,900.00
Asking for 3% - 5% down - will take $3k - $6k
Actual PITI: $835.00
Asking: $975 - $1050/mnth rent
Most houses in the neighborhood are owner occupied w/ similar PITI.
We have not had an opportunity to check credit history because so far no one has been by the house and requested to see it further.

Also here are the samples of the ads we are running:

Area-9 No Bank Qualifying!
Desperate Seller Will Rent-
To-Own 3bd/2.5ba 1420 sf.
Easy! #136,900 704-XXX-XXXX

And

A-9 RENT TO OWN
w/ No Bank Qualifying.
I Am A Gorgeous 3bd/2.5ba
1400 sf Home. Own Me
Today! Easy! $136,900
704-XXX-XXXX

And we tried

A-9 NO BANK QUALIFYING
Why Rent When You Can Rent
To Own? 3bd/2.5ba, 1420sf
Own Today! Easy! $136,900
704-XXX-XXXX

Any advice would be greatly appreciated. We also found more responses in the Rentals With Option To Buy section of our newspaper as opposed to just the sales section. Neither, however has yielded any great prospects. We are building our buyers list though. If we had a home with an $800/mnth rent we could have sold it already. I just went to the Pretty House Boot Camp weekend before last and found out that we should be targeting houses 75% of our median, or $95k homes. This one is more than that so the eligible T/Bs are few and far between. Here is the ad we are preparing for this weekend to try to get someone who can afford a little more per month. Let me know what you think:

Area 9 - No Bank Qualifying!
Executive Home Lease To Own
3bd/2.5ba 1420 sf. Only 14
mos old. Garage. Garden Tub
Alarm. Gorgeous. Low Down!
Affordable Monthly!
704-XXX-XXXX

Thanks again,
-Craig