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suburbantim

Here we go!

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So glad to be on board.

 

I'm taking action and hoping I can count on you good folks to help me along.

 

Had my VA put together a list of, so far, about 100 MLS listings last week and expecting another 100 this week. Sent out a small brochure offering to Lease Purchase their property. We'll see how the response to that works out.

 

Sent out 20 emails to Craigslist FSBO on Saturday and another 6 on Sunday. Got 6 responses. 2 that just need to sell outright, 3 interested and 1 maybe. One of the responses has at least 2 properties they would consider Lease Purchase on.

 

I'm using the 2 part email. The first says

 

"Hi, I saw your property online and wondered if you'd be interested in selling on Lease Purchase".

 

After they respond to that I sent

 

"Hi XXXXXXX,

 

Thank you for the quick reply. Your house sounds like it may be just what we are looking for.

 

Please let me explain.

 

My company specializes in Lease Purchasing. This technique has proven to be quite advantageous for homeowners. Done

correctly, you can receive market price for your home in less time than it would take you to sell it traditionally.

We are not Realtors and charge no commissions of any kind. In fact, our service to you is free! We'll even arrange

to have the tenant/buyers pay all closing costs, too! The bottom line is that you will net many thousands of dollars

more when you sell your property using the Lease Purchase Advantage.

 

Presently, and as is often the case, we have more tenant/buyers than we do properties to offer them. Your property

seems to fit our needs quite well. I have attached a flyer with some additional information to further explain about

the Lease Purchase Advantage. Please feel free to contact me with your questions. Or please pass along your contact

information to me, along with a good time to call and I will contact you.

 

Thank you for your interest.

 

Tim Stevens"

 

So now I have leads from 3 owners on 4 properties and I'm planning my next move. I 'm thinking I need to call, control the sitiuation, and just get the property details to make them a brief offer. I think, if there is equity and a potential rent spread I'll do a SLO. If there's no equity I'll just present a CA. On the right track?

 

What's the format of the first discussion with them?

 

What should the format of the short email offer be?

 

If they contact me and want to move forward, I'll meet them at the property with the Lease Option and get the paperwork signed, take the picutres, and start marketing. Does that sound right?

 

The funny think is, I don't even have the paperwork in place yet. Are the forms available online or do I have to wait for the info?

 

Tim

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So now I have leads from 3 owners on 4 properties and I'm planning my next move. I 'm thinking I need to call, control the sitiuation, and just get the property details to make them a brief offer. I think, if there is equity and a potential rent spread I'll do a SLO. If there's no equity I'll just present a CA. On the right track?
Hello, Tim, and welcome to The Naked Investor. Congrats on moving from talking about real estate to taking action so you can start investing in real estate. The first and most important step for anyone. Right track, you asked. Absolutely. Get back with the interested homeowners ASAP, get the property details, answer their questions, run the comps and fire off a short offer. Depending upon the numbers in the deal, what the homeowener is willing to do and what you want to do, will all be a factor in they type of deal you offer.

 

What's the format of the first discussion with them?
There is no specific format because every homeowner and conversation can be different and go off in many directions. Be yourself, try and control the conversation, and keep it brief and to the point. Your objective is to find the motivation for the seller and to get the specifics about the property.

 

What should the format of the short email offer be?
Depends on the type of deal. For example, with a CA I prefer to use my Short Offer Letter. If I were doing a sandwich lease I would use my Short Offer Form, which differs in that in has some more details and specifics, due to the nature of the deal.

 

If they contact me and want to move forward, I'll meet them at the property with the Lease Option and get the paperwork signed, take the picutres, and start marketing. Does that sound right?
In a nutshell, yes.

 

The funny think is, I don't even have the paperwork in place yet. Are the forms available online or do I have to wait for the info?
If you're referrring to the forms I use, they are included with the manual and are emailed to you.

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Tim,

 

Great wording on your initial letter! I actually just revamped mine to add some of your phrases. Also good work on the marketing, the more contacts you make the more leads and then, the more contracts you will have.

 

To answer your questions:

 

For the first phone call I have a Seller Call Sheet in front of me to remind me of key points and I keep it short and simple. My main objective is to get their email address and send a Seller Price Sheet. This is what I have on my Seller Call Sheet and I say it almost verbatim.

 

 

"Why don't you tell me a little about your situation and we'll see if our program can work for you. (They may go on and on at this point so I direct the conversation to find out if their payments are current and what their motivation is. If all is good I proceed with the following)

 

I work with buyers looking for a rent-to-own scenario and am paid by the buyer, there is no cost to you. We do all marketing at our own expense, professionally put together the transaction using my specialized knowledge, and I have all the paperwork necessary to fully execute the transaction.

 

The benefits to you are:

1. No real estate commission and no cost to you.

2. Better than average Tenants and higher than market rent. <explain rent credits>

3. Full price for your house, our buyers don’t negotiate.

4. Buyers pay all maintenance are repairs after 30 days.

 

Does this sound like something you would be interested in?

YES--Great, typically what we do is collect some information about the house, and then I can go ahead and get together a Seller Price Sheet for you. I can email it over in a couple of hours and it will let you know what we can market the house for for sale, for rent, and what your bottom line at closing will be.

 

NO—Do you mind if I email you some information and that way if you change your mind or know anyone else that can benefit from our program you will have all the facts right there in front of you?

 

The format I use for the Short Offer is:

 

Attached is the Seller Price Sheet showing for which price we can sell and rent your house. We can charge a bit more for monthly rent because of the "rent credits". These are applied towards the sale price and do not have to be escrowed. They are non refundable if the option is not excersied and there is no rent credit if the Tenant/Buyer doesn't pay by the first of every month. Therefore, you will be getting a high quality Tenant/Buyer that will be responsible for all maintenance and repairs after the first 30 days (with the exception of major systems), is highly motivated to pay the rent on the 1st each month, and who will pay higher than market rent. Due to the fact that we are offering the option we can sell the property at a slightly higher price so I worked our profit into the price making this a win/win for everyone involved.

 

We will do all marketing, showings, open houses, advertising, collect financial documents, pull credit, explain and sign the lease and option, provide the Tenant/Buyer with docs required by law, final walk-through, and we have them fill out and sign a punchlist regarding the condition of the property at the time of move-in.

 

You are free to continue to market your house conventionally and I urge you to do so. We are marketing on multiple levels and too a much larger crowd with a lease option so often once we get involved the activity really pops. If you sell or rent on your own there is no obligation to me, I just hope that you would refer me in the future to other home sellers that want to sell asap.

 

We can get your house on our website and out to our buyers list as soon as we get the go ahead from you. We can also do an open house this coming Saturday, the 5th. The process is simple, I will email you the lease and option with the same numbers on the Seller Price Sheet, you will sign both and I will assign the contract to the Tenant/Buyer. Please let me know if you have any questions and if you are ready to get started!

 

Thank you,

 

Sharyn"

 

Good luck Tim!

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Awesome stuff.

 

I can't take credit for the emails described above. I "borrowed" them from this Forum.

Ditto ;)

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How do the numbers break down?

 

Seller asking $225,000

Max retail shoud be $210,000

If that's what he needs to walk away with then the breakdown should be:

 

Seller $210,000 plus

Option Fee $7,800 plus

Rent credits $4,050 (1,350 per mo x 25% x 12 mo)

Option price to buyer= $221,900??

 

I then get my option for $210,000 at $1,350 per month for one year?

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Tim, you're looking at this as a CA, correct? If so, the first question I have is will the market accept a price of $222K? I ask because your assessment has a retail market value of $210K.

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Yes, this would be a CA.

 

I always heard that the t/b would pay above market price and rent due to the situation.

 

So, in order for this to work, I would need the property under the market value by, at least, the option fee?

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In order for this to work you must have a price that is market friendly for the t/b or you're not going to be able to move it, Tim. We can get deals all day long, but what's the point if you can't move any of them?

The first thing you must do is determine fair market value. The seller's asking price is irrelevant. Let's look at an example. . .

 

House is listed with an Agent at $225K. An offer is made and accepted at $210K. That's not a true net price, of course, because we need to deduct from that commissions and approximate closing costs. Using 7%, that means the true net price to the seller at closing would be approximately $195K.

If you were to put together a CA, the figures might look like this: the advertised price to the t/b is $225K. Deduct from this the anticipated option consideration that you will be keeping. Let's say that's $6K. Then we need to deduct the rent credits which, using your numbers above, equal $4K. When all is said and done that leaves a true net at closing of $215K. The seller will make an additional $20K. Think he'll be happy?

But the key is to be sure the terms you are offering are market friendly, or you won't find any takers, Tim.

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OK. Talked to the owner, at length and here's the deal. Please help assure me I'm on the right track.

 

He has owned and redone the entire house over the past 8 years.

He is advertising it at $225,000. We talked about the neighborhood comps, which are $195,000 to $216,000. He decided he could live with $208,000 to $210,000.

I then asked what rent he needed. He said $1,600 would pay the PITI but, if necessary he could take a small hit every month with the pay day at the end....LOL. He thinks that's reasonable for the area and understands we would raise it a couple hundred per month as a rent credit toward purchase.

Their daughter moved out to Texas and he accepted a job in Phoenix. As a matter of fact, he's there right now making plans and will be back on Friday.

He bought the house on a Lease Option so he understands it and has no problem with it.

 

What I'm thinking for my offer is a CA, $204,000 (explaining that at $1,600 per month it won't take long to eat up the additional $4K), $1,800 per month lease with $200 rent credit. I'll charge a $6K option fee to the t/b.

 

I'll market the property to a t/b at $210K with a $200/ month rent credit and $6K down.

 

Sound like a deal?

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Those numbers aren't working, Tim. In order for the homeowner to get the $204K you promised, you're going to need to market the house for at least $212,400. That would be his $204K, plus the $6K option money that goes in your pocket, plus the $2,400 rent credit you are offering.

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