Anyone doing Lease/Options? - Posted by Banks

Posted by banks on July 07, 2002 at 21:25:24:

I’m not saying I dont believe him. I’m saying its hard to believe. Just curious if anyone out there is doing it. My mentor seems to be doing a great job and I would reccommend him to anyone. I’m wondering if this many deals is typical for investors doing Lease/Options.

Anyone doing Lease/Options? - Posted by Banks

Posted by Banks on July 07, 2002 at 15:28:19:

Anyone Here doing Lease Options? Looking for people who are successful doing at least 1-4 deals per month. Thanks

Re: Anyone doing Lease/Options? - Posted by Jim Kennedy - Houston, TX

Posted by Jim Kennedy - Houston, TX on July 07, 2002 at 18:08:32:

How can we be of help to you?

Best of Success!!

Jim Kennedy,
Houston, TX

Re: Anyone doing L/O? - Need start-up help - Posted by David G (OR)

Posted by David G (OR) on July 08, 2002 at 17:37:50:

Since you asked… I’ve got a few questions for you…

What is your most successful way to find the sellers? (Do you call Houses For Rent, Send flyers, etc…?)

How does your screening compare with Bronchick’s “My name is ___. May I ask your name. Mr. ____ I am interested in renting your property, and I’m also interested in buying it down the road. Let me ask you a question… if I were to offer you full price, would you consider a lease/purchase?”.

Last question, do you have to call ‘a lot’ of people to warrant hiring a ‘appointment setter’?

David G.

Re: Anyone doing Lease/Options? - Posted by ScottE

Posted by ScottE on July 08, 2002 at 12:53:48:

Hey Jim,

On the subject of L/Os, I just bought a house ‘subject to’ and promptly put an ad in the paper:

RENT TO OWN
No Bank Qualifying
3BD/2BA/3 car
xxx-xxxx

I got (and am still getting) a TON of calls, but most are totally disconnected from reality with regard to payments. Should I have put the monthly amount in the ad? How do you bring up the subject of option consideration? Do YOU name a figure first?

Of course I figured on some bonehead callers, but 38 is a bit ridiculous!

Thanks so much
Scott

Re: Anyone doing Lease/Options? - Posted by banks

Posted by banks on July 07, 2002 at 20:25:47:

I am currently being mentored. He says I should be able to do 3-4 deals a month. Is this realistic goal? I think I have enough knowledge to be dangerous. Just looking for opinions from people who sucessful doing Lease Option. Any advice or info will help

Re: Anyone doing L/O? - Need start-up help - Posted by Jim Kennedy - Houston, TX

Posted by Jim Kennedy - Houston, TX on July 09, 2002 at 05:34:40:

David,

Before I answer your specific questions, let me say that while I will occasionally use lease/option as an acquisition strategy, it’s not my preferred method of buying. In most instances, I prefer to buy “subject to” and sell on lease/option. I’ll use a lease/option on the “buy side” only if the seller is uncomfortable selling “subject to”.

Now to answer your questions.

My most successful way to find sellers is to have them find me.

In order of productivity here are my five most effective marketing methods:

  1. Bandit Signs
  2. Bird Dog Referrals
  3. Expired Listings
  4. The $100 Business Card
  5. Magnetic Car Signs.

Because I’m predominately seeking properties to buy “subject to”, I almost never call on “houses for rent”.

My screening process differs significantly from your Bronchick quote. It’s a much more involved process focused on finding out three main things about the seller - motivation, flexibility, and urgency.

As for your last question, since I set my own appointments, I have no experience with “appointment setters”.

Hope this helps.

Best of Success!!

Jim Kennedy,
Houston, TX

Re: Anyone doing Lease/Options? - Posted by Jim Kennedy - Houston, TX

Posted by Jim Kennedy - Houston, TX on July 09, 2002 at 01:27:30:

Scott,

“Should I have put the monthly amount in the ad?”

It depends upon your objective. If you only want to deal with buyers for the specific property you’re selling at the time, then, yes, put in the monthly amount. By doing so, you’ll significantly reduce the number of calls, but they’ll be more qualified for that specific property.

If, on the other hand, you’re trying to build a “buyer’s list”, then leave the monthly amount out. I generally don’t do this, because for most of the homes that I sell, buyers are a dime a dozen.

“How do you bring up the subject of option consideration?”

During the telephone interview, I will ask, “Mr. Prospect, how much were you thinking of putting down on your new house?” Frequently the prospective buyer will “dance around” the answer. The most common response is, “It depends.” or something along the lines of: ?Well, how much do you want down??

My response: ?Well, Mr. Prospect, what I do is try to tailor each situation to fit the needs of the buyer. I try to be as accommodating as possible to develop a plan that works for both of us. Obviously, the more money you can put in up front, the more flexible I can be in other areas. What range were you thinking of for your initial investment??

Once I have a figure from the prospect, I basically have three ways to go:

  1. If the figure is higher than I wanted, GREAT! My response (with a slight pause before answering and while restraining my enthusiasm): ?I think I can work with that.?
  2. If the figure is close to the amount I was looking for, same response, ?I’m pretty sure I can work with that.?
  3. If the figure is lower than what is acceptable, ?Mr. Prospect, is that the most you can afford up front??

By doing it this way, virtually every prospect ends up with different figures based upon THEIR needs and capabilities. Last year I had a house that I was selling for $168K and I was looking for anywhere between 3% to 7% up front on a lease/option. A prospect came along and when we got to the question of the up front $$, I asked my standard question, "How much were you thinking of putting down on your new home?? Keep in mind, my minimum requirement was $5K, I expected somewhere around $8,500 and I’d have been thrilled with $12K (3%, 5%, and 7% respectively). When she said, “Would $20K be enough?”, I really had to restrain myself from jumping up excitedly and shouting for joy. Instead, I very calmly replied, “Yes, I’m sure I can make that work.” Her $20K represented almost 12% up front non-refundable option consideration. If I had quoted her a figure of 5%, I’d have left over $11K on the table.

“Do YOU name a figure first?”

NEVER!!! Every once in a while, I get a caller who knows how to play the game fairly well. They’ll be as evasive as an Enron executive about answering the question. We’ll go back and forth three or four or five or six times. Finally, it’ll come down to them asking something like, “What’s the least amount of down payment you’ll take?” At that point, I’ll put a smile on my face and a slight chuckle in my voice and say “All ya got!!” This generally breaks the tension and then I’ll explain again how I can structure a deal that best fits their needs if I know what kind of up-front money we have to work with.

Hope this helps.

Best of Success!!

Jim Kennedy,
Houston, TX

Re: Anyone doing Lease/Options? - Posted by Jim Kennedy - Houston, TX

Posted by Jim Kennedy - Houston, TX on July 07, 2002 at 21:19:37:

Does this mean that you don’t believe your mentor?

Best of Success!!

Jim Kennedy,
Houston, TX