brownpm 0 Report post Posted July 16, 2003 Just curious about everyone elses conversion success rate within the term of the original lease/option agreement. Share this post Link to post Share on other sites
MichaelC 160 Report post Posted July 16, 2003 Good idea, Pat. I'm in the 20% range, as best as I can tell. I hope the poll attracts some replies because I'd be curious to see if there is any great variation from my own experiences with this. Share this post Link to post Share on other sites
brownpm 0 Report post Posted July 16, 2003 Exactly, I don't do many sandwich lease/options. I usually buy and lease/option the property. So it doesn't really bother me that much when someone doesn't convert. I just mark the price to current value and collect another option deposit and start over. But I would think with my track record, that if I was doing sandwich options I would be as nervous as a hen in a fox house. Interested in seeing others replies, and those that have high conversion rates, I would like to know what they attribute that success to. Whether it's a relationship with a good mortgage broker, or credit repair service or how they handle escrow, etc. Hopefully you'll get some good data. Pat Share this post Link to post Share on other sites
Summer 0 Report post Posted July 16, 2003 I'm curious, if your conversion rate is only 20%, what are the reasons that the TBs are giving that they don't want to purchase the house? Thanks, just curious.Summer Share this post Link to post Share on other sites
MichaelC 160 Report post Posted July 17, 2003 Hello, Summer. You've been in stealth mode, enjoying the New Mexico monsoons, I suppose .In my case, the tenant/buyers who aren't exercising their options have a variety of reasons why. Everything from being unable to, to divorce, to deciding against buying this particular house at this time, etc. There is no one reason; everyone seems to have their reason why. Generally, though, more times than not it is due to short sightedness on their part and not planning for what is needed to obtain funding when the option comes due. Share this post Link to post Share on other sites
-Tony- 0 Report post Posted July 17, 2003 brownpm, First off who cares if they exercise? Don’t take this the wrong way but in the long run you will be better off. EXAMPLE: You sign a deal 1 yr 4 rights to extend 95k worth 100k to make it easy we will use 5% appreciation. Say it sells first year. Sell 105k 3k option Cash flow 2.4k100 rent credit (rc) –1.2kBack end 7kTotal 11.4k Using simple math and same rent (of course rent and option money would go up yearly)5th year it sells Sell 125k3k option x 5 = 15kCash flow 2.4 x 5yr s= 11k 100 rc = -1.2kBack end = 25.8kTotal = 51.8k If it didn’t sell buy it, it is actually worth slightly over 125k your payment at 7% would be < $750In my area 125k houses rent for $1000-1100 l/p add another $150. My math on the low side says that is $400 cash flow 4.8k a year This to me sounds better if they don’t buy. I am in a strong sellers market and have been trying to get people to bow to my wishes with a l/p. Well my strategy may change, here it is. Buy conventional non-owner occupied sell on lease purchase, go for the working mans/woman’s neighborhood (There are more people to target these house to). Sell via l/p to make a profit, but really hope it doesn’t sell. Good luck and remember don’t expect back end, think of it as a bonus. Share this post Link to post Share on other sites
brownpm 0 Report post Posted July 17, 2003 Tony, I couldn't agree more. And the way you are thinking about changing your strategy is the way that I do this business today. Good luck, Pat PS - Why didn't you vote? Share this post Link to post Share on other sites
