"The Cooperative Assignment Advantage"

[Gary (MO) 0]

While cold calling last month, I ran across a couple who owned 5 rental homes and they were "tired of T.T.T.". I asked them about L/O the properties and they were going to "think about it". A month has passed (this was before this week's lesson Michael) so I called them back this afternoon. She told me they decided not to L/O because they wanted more control - they had just decided to owner finance.

 

I'm thinking this is a good fit for a CA. She was open to the idea and agreed it would be ok for me to send her some additional information. In looking through my Word docs though, I'm not seeing it....am I missing it or does it not exist?

 

Gary

[option8 0]

I think the name of this document starts with "Sample Leas..."

 

I can't check because I edited it and renamed it yesterday.

 

option8

[Gary (MO) 0]

Thanks option8. Could you be thinking of the Sample Intro Letter?

[Doug Pretorius (ON) 9]

Gary, just send the LPA, it covers the bases and there's nothing in there that leans towards a sandwich over a CA.

[MichaelC 160]

The doc you're looking for is The Lease Purchase Advantage. You can send it along with the Sample Intro Letter, if you want. Attach your business card and you're all set.

[mpine 0]

But how about a "The Cooperative Assignment Advantage",

 

Like if you dont want to be doing sandwhich deals...

 

Mike

 

:ph34r:

[MichaelC 160]

I hadn't thought about that little twist, Mike. I guess it's six of one, half a dozen of the other. My initial thought is that Cooperative Assignment is a phrase/subject that no homeowner is going to know about. On the other hand, our success as investors is directly related to our ability to educate and inform homeowners about what we do, how we do it, and why it is advantageous for them. So, perhaps their initial ignorance is no obstacle as we quickly bring them up to speed.

When I am soliciting a homeowner via mailings, I will usually send the two docs I mentioned above, along with my business card. Short and simple. I'm not trying to sell them on the idea right off the bat, or offer them a complete tutorial on lease purchasing. I want to pique their interest and get a phone call. If the return caller is a male, I badger and threaten him into doing business :ph34r:. If the caller is female, I charm her, I woo her, I cajole her until she is a helpless, pliable, and willing partner . Anything for the deal, Mike, anything for the deal.....

Just to clarify this, I want to say that my approach is almost always to pursue a deal as a CA. Now, that's my personal bias, and I don't want to give the idea that my way is the "correct" way. My reasons for this approach are, first, because I find the CA a much easier sell than the sandwich lease. Secondly, where I live is an extremely strong sellers market, and has been for four years now. It makes sense that I can find many more deals when I am getting the homeowner more than they were asking, versus trying to knock 'em down 20% to give myself enough of a spread to work with that a sandwich lease might require.

Now, if they surprise me and I find they are more hot to trot than I originally figured, I'll change gears and go for a sandwich.

Capisca?

[Gary (MO) 0]

Hmmmm.........

 

Michael, I would not have guessed that your personal bias was for CA's from reading the manual.

 

I can see how the phone script would still work - I'm sure I could wing it but would you mind sharing how you proceed from the "...would you consider selling your property on a lease option"? How do you present it for a CA? Are you up front with the seller? Like "Hey, we're in this together let's get you full price and I'll profit from the 'non-refundable option' money or are you more "sign here and I'll take care of it"?

 

Thanks!

Gary

 

PS I'm thinking a "Cooperative Assignment Advantage" would be a unique critter that could be used too - like with the folks that started this post.

(Just my 2 cents...

[Doug Pretorius (ON) 9]

Gary, here's (nearly) a direct quote from Michael to the same question I had (how to adapt the script for CAs) ... Note: This comes after the part "We're filling a need."

 

I wonder if we could work together on this and find a solution that benefits you?

What if I could find you a buyer subject to your approval who agrees to pay you an above market price, and who will be responsible for all maintenance and repairs during the agreement?

What if you can sell your property without paying Realtor fees or closing costs? And what if I can do this for you in a matter of weeks? And all of this at absolutely no cost to you if your property doesn't sell.

Would that be something we can work on together?

[MichaelC 160]

Michael, I would not have guessed that your personal bias was for CA's from reading the manual.

That's because I tried not to inject any personal bias into the manual. My preference for CA's are based on a variety of factors, which I'll share in a moment. However, I do not want to be seen as saying "This is what I do. Thus, this is what you should do." I'd rather share the different ways a deal can be done and profits made. That strikes me as effective teaching. If you are able to present two or four different approaches to the homeowner, your chances of getting the deal are certainly better than if you approached every deal the same way.

Having said that, my preference for CA's at this time is, in large part, due to present market conditions. Where I live, and in many parts of the country, we are experiencing very strong sellers markets. With the sellers in control as they are, what need do they have to drop their price 20%? Without that spread to work with it makes no sense to pursue a sandwich lease. Thus, the CA is much easier to sell to the homeowner, while still enabling me to pick up two, three, five thousand dollar paydays. When market conditions change, (and they will), and the buyers are in control, I'll do a 180. Offers of thirty percent or more below asking price, with an attitude to boot, will be the norm .

As for an effective phone script, Doug's reply is right on. Again, because of the strength in my local market I want to make the seller feel like I need them, that they are in control. They're feeling smug, of course, but there's a method to my madness. Put 'em at ease, tell 'em how I want to work for them and in the process increase their bottom line. You'll get their attention and a few minutes of their time. That may be all it takes if they are even slightly motivated and not insistent on all cash today.

If you call enough FSBO's and FRBO's, and market to have them call you, you'll quickly see how easy it is to get comfortable pitching the CA, and how much better a response you get from the homeowner in many cases.

[gerard 0]

hi michael,

 

 

i was wondering if you could explain what a ca is?....is it the same as a lease option purchasing?...if not can you tell me what the difference is please, i have been reading the posts and i keep seeing "ca" i would like to know what it means and a short simmary on how it works. thank you very much

 

 

gerard

[MichaelC 160]

Hi, Gerard. Sure, I'd be happy to give you a brief explanation.

A CA is a Cooperative Assignment. It is a lease purchase deal. However, unlike a sandwich lease where we, as the investor, are in the middle of the deal, the CA is a deal where we put it all together for the homeowner and get paid for our smarts.

Another way of looking at it is that instead of finding a tenant/buyer for ourselves, as we would do in a sandwich lease, we are finding a t/b for the homeowner, getting them the same great terms that we would be trying to get for our own deal.

Our profit in the deal comes from the option money that the t/b puts down. We are going to keep all or some of it. Depending upon other factors, we may even get to keep all or some of the monthly cash flow, too.

It's a technique that works well with a homeowner who likes the concept and idea of a lease purchase, but isn't motivated enough to give us the terms we need to have a spread which allows us to be in the middle of the deal. Instead of walking away with nothing, like another unwise investor might do, we can put together the CA for the homeowner and pocket several grand for sharing out specialized knowledge......

And welcome aboard, by the way . We're glad to have ya'.

[Gary (MO) 0]

Thanks again Michael and Doug! I sent the homeowners the LPA and a brief letter almost word for word of what Doug posted above. If they're even remotely interested they've got my phone number and email addy. I'm off to hone my marketing (check'in out option8's web site and planning my business cards, etc...)skills and.....still look'in for that first one!

Gary

[Mark in St. Louis 0]

Gary,

 

Where in Missouri (MO) do you live?

 

It appears that you are a Cardinals fan.

 

I live in St. Louis....hence the name.

[gerard 0]

michael

 

thank you very much for explaining to me what a ca is. I unfortunately am one of those investor who was unfortunate to walk away with nothing. the seller was motivated but not motivated enough to give me all control. this is the first time i have heard of the ca and i would like to know how do i obtain ca contracts?. thank you again i really appreciate you taking the time to inform me.

 

 

glad to be aboard!!!