Seller isn't open to CA.

[GetSmart 0]

If the seller is motivated to do a lease purchase but isn't receptive to you walking away with the option fee, what adjustments are you using to make the deal work?

 

I have been trying this approach for awhile even before i found this community and i always get the same ole same ole "what security do i have that your tenant will pay?" I always tell them that there is no guarantee and if they find their own tenant there is no guarantee they will pay.

 

What is the back up plan to gain trust in this approach?

[Jason (AL) 1]

Some folks here have split the option consideration 50/50 whenever

a seller has balked at the idea of you getting all of it.

I've done it on my 2 CAs....just cuz I was nice and not because

they initially asked.

 

Just throwing things out there, but you could negotiate the following:

- split the OC fee 50/50

- split the monthly cash flow

- split the OC fee and monthly cash flow

- set up the deal as a consultant

*If they balk at any or all of the above, I suggest moving on. There's

no need to "beg" the seller into doing anything.

 

Also, there is no guarantee of anything when trying to

predict what will transpire over the course of a few months, years, etc.

You can only do the best you can as negotiated in your agreements with the

seller.

However, you are offering a solution now.

This sure beats hoping it'll sell for top dollar, all cash by

weeks end.

 

If they don't wanna deal, then let 'em go and let 'em screw things up

for themselves.

Time has a way of motivating someone that has problem properties.

Who knows, you may get a call from them down the road.

 

Til then, focus on those that need a solution today, if not yesterday.

[MichaelC 160]

Pretty much what Jason said. If the homeowner is haggling over every dime and dollar, that's your clue they aren't serious. And if they want a guarantee that everything will go according to plan, I tell them flat out I can't give it to them. But I am quick to emphasize that the quality of a tenant/buyer is better than that of a tenant, and repeat the advantages of a lease purchase versus a lease. Sometimes it works, sometimes not. And usually the clincher is offering to share some portion of the option consideration.

[BEV! 0]

.."what security do i have that your tenant will pay?"

This is either my favorite question or my least favorite question of them all

 

What is the back up plan to gain trust in this approach?

Here's how I handle it, sweet, short and to the point...( successfully)

 

Landlord: "what security do i have that your tenant will pay?"

 

BEV: "You have the same security they do from YOU in keeping your mortgage payments current to avoid foreclosure on their future home as this would mean a loss for the t/b of a five figure amount and homeless"

 

 

BEV!

[Gordon Holtner 0]

My opinion on this would be to tell them something along the lines of what Bev said and telling the seller that you require the TB to give to the seller 12 post dated checks. This way the seller might feel more secure because they have something in hand.

[vballdarin 1]

I said something very similar the other day. It was simple....to the point....and they had no comeback other than......ah....um......well.........

 

I'm slowing presenting myself as a guy who would like to help people out of a bad situation....but not a guy who DESPERATELY NEEDS to do deals.

 

Does this mean i'm starting to think like the rest of the big boys and girls?

[GetSmart 0]

one lady contacted me and i sent her my agreement and she said ok and she was willing to let me keep the equity. hmm it might be more to this tale spinning market after all. i will let you know if she signs the agreement so i can start marketing for tb's.

 

i went right for the lease option deal since she only had like 15k in the deal and a possible 200 a month cash flow which i will keep. she felt more comfortable with the sandwich lease more so than me walking away with the profit leaving her with the tenant.

 

one thing i did tell was, if that is what she chooses, i will collect the rent and send her a money order in the name of her mortgage company to keep her from pocketing the money & getting me in trouble down the line with the tenant.

 

i wonder how many of the 50 leads i passed up would have been willing to do this type of deal.

[GetSmart 0]

oh yeah thanks everyone for reassuring me that if the seller is reluctant to do things my way then go at it alone and possibly go to foreclosure.

 

one thing i have noticed that when i present a good deal to a seller and back peddle out of the deal from their shakiness they become more desperate. oh yeah is a 15k spread good enough for this type of deal?

 

purchase price:129k

value: 144k

sub lo: 155k

sub lo rent credit: 7k

closing cost:3-4k

 

these are the numbers if the market continues stagnants or if it improves the tenant will have an even better deal.

[MichaelC 160]

Clarify those numbers for me, please.

Your purchase price from the homeowner is $129K? OK. First question is, can you reasonably expect to find a t/b willing to pay you $11K over market price in today's real estate market?

How long a term do you have with the homeowner? What is the rent you will pay, and the rent you will receive?

[GetSmart 0]

Clarify those numbers for me, please.

Your purchase price from the homeowner is $129K? OK. First question is, can you reasonably expect to find a t/b willing to pay you $11K over market price in today's real estate market?

How long a term do you have with the homeowner? What is the rent you will pay, and the rent you will receive?

sure, the comps suggest todays value is between $140-148k. i want to lock in a lease purchase deal with a tenant for $155k. I was always under the impression that its always best to charge the tenant buyer no more than 10% more than market value, since the value can increase and they are locking in a deal to become a homeowner. There usually is no other way for them to become a homeowner unless they go the lease to own route.

 

Same way with owner financing, or contract for deed, you charge the tenant more because they are getting great terms to lock in the home. I think this is worth since most people are willing to pay more for rent to own appliances. Once you calculate credits and all they are back down to todays market rate which the value could increase over the next year or two.

 

When the seller signs it will be a 2 year lease agreement, with the right to extend the lease another year for another $2k down.

 

its a newer home, needs only carpet and paint which the tenant will be expected to take care of.

[MichaelC 160]

I don't know where you're located, but in my market these days, there is no way to get a t/b to pay above market price. But if you can, then I say go for it. Just be certain you grant yourself ample marketing time to find a t/b, and be sure the agreement between you and the homeowner has some sort of weasel clause for you.

[GetSmart 0]

Just be certain you grant yourself ample marketing time to find a t/b, and be sure the agreement between you and the homeowner has some sort of weasel clause for you.

will do thanks. here is a question i want you to answer if possible. why would you sell a l-t-o to a tb for todays market value? it seems like they will be getting an awesome deal if the market improves, plus you are giving them a rental credit so this imo is working against the benefits of a l/o.

 

i mean i would expect to get a l/o for myself below todays market value, because i am not looking for any rental credits, but for me to sell it at todays market value how is that working to your advantage? i am really confused now .

 

i have been charging above market value for my tb's because they are getting such a good deal with the rental credits. plus in my market appreciation is 4% a year and i want to get that as well until they are capable of purchasing the house. now if the house isn't worth what i am charging them at the end of the lease, i will work the price down to market value so they can buy the house.

[GetSmart 0]

i have read one course that says if you can profit monthly from tb rents then you should slo at full market value if there is not equity and charge more than market value if they area is appreciating. but don't over charge for the house if the house doesn't appraise. their book was titled how to profit from homes at full market value with l/o. i have used the method and it seems to work.

 

but your site has taken things to a new plateau by collect a ca and leaving the deal. now that is innovative.

[MichaelC 160]

here is a question i want you to answer if possible. why would you sell a l-t-o to a tb for todays market value?

Because my market is depreciating at about 10% a year. So if someone is willing to pay today's value, I'm doing well. The key with a sandwich lease, of course, is you getting it at a bargain price and for as long a period as possible. This creates all sorts of possibilities for you. You need to know your market, where it is headed, and what a t/b may be willing to pay for the property.

[dionwisn 0]

Some folks here have split the option consideration 50/50 whenever

a seller has balked at the idea of you getting all of it.

I've done it on my 2 CAs....just cuz I was nice and not because

they initially asked.

 

Just throwing things out there, but you could negotiate the following:

- split the OC fee 50/50

- split the monthly cash flow

- split the OC fee and monthly cash flow

- set up the deal as a consultant

*If they balk at any or all of the above, I suggest moving on. There's

no need to "beg" the seller into doing anything.

 

Also, there is no guarantee of anything when trying to

predict what will transpire over the course of a few months, years, etc.

You can only do the best you can as negotiated in your agreements with the

seller.

However, you are offering a solution now.

This sure beats hoping it'll sell for top dollar, all cash by

weeks end.

 

If they don't wanna deal, then let 'em go and let 'em screw things up

for themselves.

Time has a way of motivating someone that has problem properties.

Who knows, you may get a call from them down the road.

 

Til then, focus on those that need a solution today, if not yesterday.

 

Very helpful reminders. Often times I overlook the idea of the Consultation. Most importantly is to never burn a bridge with a homeower their memory of you could land you the deal after all later on down the road. By the way what do most of you guys charge for a consultation ,half months rent?