Lease Purchase Investing in a "Seller's Market?"

[Guest Referral_Wealth]

Maybe, with my limited understanding of HOW to *sell* the benefits of a LP option to a prospective home seller, I shouldn't be asking this ..... but, since my grade school teacher swore to me, "Barry, there's no stupid questions," I'll give it a go:

 

WHY THE HELL, IN THIS HOT SELLER'S MARKET, WOULD A HOMEOWNER WANT TO FINANCE / STRUCTURE A LEAVE PURCHASE WHEN THEY'RE GETTING MULTIPLE "AS IS" CASH OFFERS ?

 

In ohter words, I know of many homeowners, in my market (Virginia Beach / Norfok / Chesapeake, Virginia) who go the FSBO route. The next day, a realtor calls them up and says, "Guys, you're listing this at $190K. Let's ME list it for $235K and you'll be surprised that you WILL get some contracts within a week."

 

Well ..... these homeowners, who never expected such pricing glory, DO indeed get those offers.

 

So, again, as an Investor who wants to sell the advantages of Lease Purchasing to homeowners, will I be going upsteam without a paddle due to this hot "Seller's Market?"

[Doug Pretorius (ON) 9]

So, again, as an Investor who wants to sell the advantages of Lease Purchasing to homeowners, will I be going upsteam without a paddle due to this hot "Seller's Market?"

My market is pretty much the same as yours, and as much as I'd like to believe that there are enough sellers out there who either need or want the benefits of an LP, my experience says that the answer to your question is a resounding: YES! But that doesn't mean it's impossible.

 

Let's face it. With the exception of a small percentage of investors or homeowners who want to become investors, all other sellers want one thing and one thing only: A hassle-free cash sale at their price with a closing of their choosing. In a hot sellers market that is exactly what they get. Sometimes it's not super easy, and sometimes they have to knock a couple of percentage points off the price, but generally they get pretty close to what they want. And this goes for ALL sellers regardless of their reason for selling.

 

I certainly acknowledge that there are sellers who NEED to sell. The most common reasons are that they can't afford the payments or they need to cash in on their newly discovered equity to pay off other debts. These people are the few and far between "motivated" sellers. Now, if you can get your message of deliverance in front of enough of them on a consistent basis, you may get the call from the ones with the ugly houses that won't move, or the realtor that doesn't advertise, or the foreclosure date next week, or whatever. Then you might be able to work an LP or CA.

 

Depending on factors like market demographics, the amount of competition from other investors, your marketing budget, etc. You may be able to get enough of those 11th hour calls to build a business around. And you may not. The only way to find it is to try.

 

I've done a lot of marketing for motivated sellers during the sellers market here and my results have been pretty consistent at roughly 1 motivated seller per 100 calls. Which happens to be exactly the same ratio that Ray Como got over the series of seminars that his Mastermind Script book is based on. He and his students made/received just about 26,000 calls with sellers, met with about 850 of them, and closed I believe it was nearly 300 deals.

 

It doesn't seem to make much difference where those calls come from, so it would seem the cheaper the marketing the better, since you can reach more people for the same price.

 

Unfortunately I wasn't able to convert any of my calls into deals. I came very close to doing a CA one time, but they ended up taking a cash offer from someone else for a few thousand less than their asking price. And that was the story of my life as a creative investor.

[nck-mail 0]

Unfortunately I wasn't able to convert any of my calls into deals. I came very close to doing a CA one time, but they ended up taking a cash offer from someone else for a few thousand less than their asking price. And that was the story of my life as a creative investor.

That "was" the story? Does that imply you're not an investor now?

[Doug Pretorius (ON) 9]

Not a creative investor, as the term is usually used, at least not on the purchase side.

[nck-mail 0]

What do you do, then? Traditional investing, ie, go out and get a loan, then install a renter and wait for the appreciation?

[Doug Pretorius (ON) 9]

Nooo! I don't have any interest in being a landlord, or betting on appreciation.

 

I mean buy conventionally and then sell rent to own. I structure my deals for cash flow, appreciation (forced or otherwise) is just gravy.

[Barry 0]

Hey Referral_wealth,

 

Noticed your post and had to reply for a couple of reasons. Noticed your name is Barry (mine too) but saw this:

In other words, I know of many homeowners, in my market (Virginia Beach / Norfok / Chesapeake, Virginia

Although I live in Maryland now, I am from Virginia Beach.

 

I started my investing carrier in Virginia Beach and hold rental property there now. The Seller Market environment you describe exist here in Maryland as well. Although this type of market definitely produces challenges for creative investors, there are deals to be found.

 

In the last eight months I had 3 sellers deed me their homes. I also had one agree to a short sale (which the lender accepted).

 

I'm not personally experienced with lease option acquisitions, but feel they will fall into a similar pattern as sub-to deals where A highly motivated seller is the key to landing any deal. Most of my motivated sellers find me through my website.

 

I often reflect on my Virginia Beach roots as an investor. I really miss the RE environment there. Feel free to email me and let me know how you're doing.

 

Best wishes for your success,

Barry

[Guest Barry (ReferralWealth.net)]

Thanks Barry for the encouraging words ......

 

Always look forward to conversing with somebody from *smal wave* Virginia Beach :-) .... Ahhh, couldn't resist (I'm originally from San Diego so, when I see surfers wading out at Rudee Inlet for the next big 3 foot wave , I scatch my head and move on down the boardwalk on my bike.

 

Anyway, what's your website ?

 

Would luv to check it out and see some of the unqiue features, seller-oriented stuff you have there.

[nck-mail 0]

Always look forward to conversing with somebody from *smal wave* Virginia Beach :-) .... Ahhh, couldn't resist (I'm originally from San Diego so, when I see surfers wading out at Rudee Inlet for the next big 3 foot wave , I scatch my head and move on down the boardwalk on my bike.

 

You think San Diego's something? Take a trip to Haleiwa, HI, in mid-January. And bring some clean underwear...

 

Would luv to check it out and see some of the unqiue features, seller-oriented stuff you have there.

 

Same here. I'm also in Va Bch and have yet to come across a motivated seller. They have no reason to be - they're surrounded by multiples of motivated buyers.

[MichaelC 160]

Barry, (the new Barry, that is), and Naomi, some good advice and opinions have already been offered up, but that's never stopped me before from adding my own......

Let me be the first to say that as investors, our primary task of finding motivated sellers is infinitely easier when we find ourselves in a buyer's market. I mean, let's face it. If a homeowner has their property on the market for three months and hasn't had an offer, when we come a-knockin' the door will be answered. Coffee and crumb cake will be served, cash bribes under the table will be offered, and the paperwork will be signed on the spot.

However, real estate markets in most parts of the country these days are not like that. The sellers are in control. Don't kill the messenger. Them theres the facts.

Here in south Florida, for example, we are in the fifth consecutive year of a record real estate market. Each year breaks the previous year's record for number of sales. And appreciation is averaging 18 to 20 percent per year for this five year period. So, I can empathize with what you are facing from first hand experience.

That said, what do you want to do? Quit? I can't. I don't know anything else. I was fired from my last sales rep job 15 years ago because I couldn't sell. I had a garage sale last October and I lost money!

With quitting not an option, we have to look for other ways to profit with the market conditions that are given to us. If you're looking for 50 cents on the dollar bargains, you might find one. But they will be far and few between and you'll starve in the meantime. You need other techniques in your bag of tricks. For me, and others I know, the flexibility that lease purchasing offers is one way to address a seller's market. We don't need equity. We can pay full retail. We can be paid for sharing our specialized knowledge with a homeowner. Now, armed with this our market of potential sellers who want to deal with us is greatly enlarged. Now, we don't need the desperate and the downtrodden. All we need is a homeowner who needs debt relief. A homeowner who needs that monthly payment off their back. And there are many more of them than you realize. Because along with this record real estate market we also have record bankruptcy filings and record numbers of foreclosures! Folks are in trouble. If you can find them, and if you can let them know where to find you, the deals will follow. You need to remember that just because your local market is strong, that doesn't mean every seller in it is also.

Persevere and you'll succeed! I honestly do believe that.

[Gene 0]

Michael:

 

Thanks, I needed that this morning.

 

Gene

[Barry 0]

Barry (Referral Wealth)

 

I know what you mean about Va Beach surf. Even though I spent most of my adult life in Virginia Beach, I was born and spent my first 17 years growing up and surfing in Puerto Rico. I've surfed quite a bit in California. I enjoy Encinitas, Del mar (15th street) Cardiff and Solana Beach. My west coast surfing has also taken me to Mexico at Baja Malibu down to Ensenada and shipwrecks. I've surfed both coasts of Australia and lived in Costa Rica for one month each winter for 5 years. I keep a surfboard in Hawaii and one in Tortola.

I rarely surf in Virginia Beach now.

 

You may have visited my website already.

Its Sellthehousefast.com

 

I have a feeling I'll meet you sometime in the future. I pass through VB for a couple of days about every 3 months.

 

keep in touch,

Barry