Posted by Lori Samson on August 16, 2000 at 16:06:26:
I find that getting an expired listing sheet is far better leads than trying to deal with agents. It won’t be your agent that’s the problem but the seller’s agent that can kill a deal a 30 paces!
I have about 10 ways to locate and you can e-mial me and I will send you that list but I love doing things the easy way and you can run an ad that says “I’ll lease your house if you give me the option to buy”. That’s a no brainer! You won’t get many calls but the ones you do get will be good leads! Then just drive neighborhoods and write down all the FSBO’s from the houses you like. I use to do that for 3 hours every Monday and follow up on the calls for the rest of the week and make about 3-5 offers a week and getting at lease one (usually). I had so many houses I could barely keep up with it all! FInd what you like best and then stick to it. I also like to have someone else find deals for me!
Lori
Posted by Brenda K on August 16, 2000 at 01:41:14:
Ok I understand that you can get into L/O without having good credit but I do have a few questions
Say I L/O a house with the intent of L/O it to someone else. A year down the road my tenant wants to exercise his option to purchase but I still don’t have good enough credit to qualify to purchase the house-- how do I sell it to him?? (My understanding was that I would have to own it for at least a few minutes for the duel closing to take place)
What happens if the people I L/O the house to trash it. I mean I don’t even technically own the house yet so would this just be a huge loss to the original owner??
Thanks to all of you for your patience in answering our questions
Re: Lease option QUESTIONS - Posted by Lori Samson
Posted by Lori Samson on August 16, 2000 at 02:08:37:
The deal does pass through you briefly at closing and you never have to actually buy it. You do not need financing nor do you have to be credit worthy to do a sandwich lease optioned property closing.
If your tenant/buyer leaves a mess and it needs paint and the carpets cleaned, you make the repairs and get someone back into the house with some more option money down. You may have to float some money for the repairs but as soon as you have your new tenant/buyer you will have more option money to pay yourself back with. If it is serious damage then that’s vandelism and it can be covered on the insurance of the sellers. We have done over a hundred lease options and we have never had to make a claim for damage yet. We have made repairs and had to do a lot of cleaning though! The most I have ever spent on repairs after a tenant/buyer’s default has been about 1500. and I got the whole house repainted and repaired and I raised the sales price and the rent and the down payment! As a matter of fact I am trying to close on that one this week or next! I have had two tenant/buyers and I have made 4500 non-refundable option money from the first tenant and I got 5000 from the second and I make 310 per month cash flow from the rent each month. That’s why I didn’t mind spending a little to make a lot! I have made 9500 just from option money and I have made 7440 from two years extra rent and I still have an 8400 tail end on this one. I wouldn’t have complained if I spent 3000 on repairs because it’s all relative to how sweet the deal is. I will have netted a total of 25,340 on this one deal. Can I afford to worry about a few problems? Sure!
I don’t understand why the original lessee/option holder wouldn’t need to be creditworthy. Can you explain how this works, and why creditworthiness is not an issue as to that party?
I have a few questions regarding your lease option business. How do you locate your homes, what method of advertisment have you found to work the best? If, or when, you work with real estate agents on homes that you eventually lease option what type of deals are arranged regarding their commission? Is it best to pay them a flat rate for each home and be done with it rather than have then waiting to share in the proceeds of the sale when it takes place a few years down the road?
What is your opinion regarding the use of a list of expired homes from the MLS as possible sources for lease option deals?
Re: Can You Explain the Mechanics of This? - Posted by Lori Samson
Posted by Lori Samson on August 17, 2000 at 01:09:59:
In a sandwich lease optioned deal that goes to closing, will only pass through you to the buyer. You don’t actually have to get financing for the property. The sellers will 99.99% of the time never even ask you about your credit worthiness because they look at you as the money bag investor and it will never cross their mind as to your credit worthiness. I have never had a seller ask me about my credit standing. They will sometimes want to know what type of person I am going to put into their house.
You will sit in the middle at the closing table and no one will even care about you… only the buyer. You don’t really buy it! I close on one tomorrow and on the closing statement it goes from the seller through me to the new buyer and I only pay 225 in closing cost and everything else is charged to the buyer or seller. I just show up and sign everything and I pick up my check in a few days and smile all the way to the bank! Cool huh?
Lori
