Posted by Peter on May 26, 2007 at 15:00:47:
Thanks for the good advise. Since I’m using an “option” to put the house under contract, not sure if I can re-fi since I’m not on legal title to property.
My goal is to use the retail buyer’s credit/money to fund the deal to cashout the seller and my profit… Thinking I could market “seller financing” and maybe I could take back a second for the buyer to get some residual cashflow as well.
Finding Retail Buyers in a Buyer’s Market - Posted by Peter
Posted by Peter on May 23, 2007 at 12:32:58:
What are good ways for someone short on cash to market and find retail buyers in this buyers market? I have “pretty” houses under contract, with an equity spread, but have not found any buyers. Since I’m short on cash, I advertised on Craigslist using the usual “seller financing available”, “must sell”, “instant equity” to attract buyers. Any ideas on how to find buyers? Are there other ways or ways on internet for someone that’s short on cash to market and find buyers?
Re: Finding Retail Buyers in a Buyer’s Market - Posted by William Flood
Posted by William Flood on May 24, 2007 at 20:01:49:
Peter,
If you are in a position to do so, there’s a really good twist on the lease option tactic that works really well.
Advertise in the for rent section, and keep the rent within market rates…perhaps just a tad high, but don’t overdo it. Offer a lease option, basically gratis. Structure it so that, if they pay their rent on time you offer a nominal rent credit, but one that will help to build their down payment or closing costs. Run the lease option for a year or two.
Then, at the end of the year, have a conversation with the leasee stating you really want to sell the house and help walk them through the buying/financing process. While never guaranteed, in essence, you put a built-in buyer in there when they rented.
You want to put a pretty good renter in there because you want to help them with the buying/qualification process. If they have lousy credit and can’t qualify for anything, the rent credits aren’t going to do much.
The trick to all of this is focusing intially on a tenant. It’s combined with staying away from the high-dollar tactics you’ve probably seen with the lease-option guru types, that often eliminate 2/3rds of who might be interested in your property. The downside is that you won’t cash out for a year.
Feel free to contact me to chat about this concept. I use it all the time.
Re: Finding Retail Buyers in a Buyer’s Market - Posted by Christen
Posted by Christen on May 23, 2007 at 17:35:56:
I advertise in the paper, owner financing, small down $X per month. Then I hold the mortgage and immediately after closing I sell the mortgage, I might get 74k for an 80k mortgage, in the end it’s the same as if they went FHA and I paid for their down payment, and I sell it usually within 2-6 wks.
Does Internet Really Work? - Posted by DaveB (NJ)
Posted by DaveB (NJ) on May 23, 2007 at 14:23:42:
I advertised on craigslist a month ago and, aside from other realtors
trying to get my listing (or list it on the MLS), I only recently got 1
potential serious buyer. But he’s very shrewd and is looking for low low
pricing. Unfortunately, I elected to use a realtor, otherwise perhaps I
could have taken his low offer. I also just recently listed my Princeton
townhome on Ebay not as an auction but as a classified. Cost about
$150, but I haven’t gotten anything yet.
Anybody else do anything on the Internet that produced real buyers?
Thanks,
David
Re: Finding Retail Buyers in a Buyer’s Market - Posted by Peter
Posted by Peter on May 24, 2007 at 23:34:49:
Thanks William for sharing that information!
My goal is to get a property under contract from a seller with at least a nice profit spread and quickly re-sell to a retail buyer that may have problem credit at or near FMV getting them 100% financing through a sub-prime lender. I want to cash out the seller and take my profit, preferably within 30 days.
So far my properties under contract are not local, but out-of-state, since it has been very difficult to get these type deals in my area.
I’ve gotten a couple responses from placing rent to own ads. Although I advertised for RTO, could I just switch gears and tell them the advantages of buying with “100% financing, zero down, lower monthly payment and lower price” versus buying through the RTO program with higher selling price and monthly payments with no depreciation?
I’ve also heard that one could sell to a credit partner for a small profit to get some cash now, and then partner with the credit partner to lease option to a T/B while sharing the profits with your credit partner. Any thoughts of this method?
Re: Finding Retail Buyers in a Buyer’s Market - Posted by Peter
Posted by Peter on May 23, 2007 at 20:27:37:
Hi Christen. Thanks for the info. I was under the impression that one would net more by having your retail buyer go through a lender. I thought one would take a big discount by selling to a note buyer at clsoing. So if I have a house with FMV $210k and try to sell at $190k, what kind of discount would I take with note buyer? I would like to net $20k at closing and I need to get cashed out at closing to pay off the Seller. Where can I get more information ? Thanks.
Re: Finding Retail Buyers in a Buyer’s Market - Posted by Bill L (FL)
Posted by Bill L (FL) on May 23, 2007 at 19:06:11:
Hi Christen,
I would love to get more details on this because I’m considering doing it myself on a rehab I’m selling. Who do you sell the note to and what are they looking for as far as FICO and downpayment? The discount seems reasonable. Does it decrease if you season the note for six months?
Thanks,
Bill
Re: Does Internet Really Work? - Posted by Pat
Posted by Pat on May 25, 2007 at 21:30:06:
As far as I’m concerned, the internet is way over rated. All of my buyers have been local people responding to my ads in local papers. This has been the case for some 15 years now. Since my local paper automatically lists ads on the internet, I occasionally get a call from out of state but no serious action.
It’s the same way with brokers. I’ve always felt that the MLS was a gimmick to get listings while the reality is that the property is in effect buried with a million others. I recently put one of my properties in the hands of a broker friend who is very successful according to her peers. She has in the past provided us with properties we wanted to buy so we decided to see if she could sell for us in this instance. After 6 months on the market she netted 1 call. The listing contract expired the other day so we placed our own ad as we usually do. Today was the 1st day it ran and we got 6 calls. If things run true to form as in the past we’ll probably get 50 plus calls before the week is out with 10% of them qualifying for financing and not knowing it. Who needs the internet or the MLS? Not me. And frankly, not you.
Re: Does Internet Really Work? - Posted by Rich-CA
Posted by Rich-CA on May 25, 2007 at 01:49:30:
Craigslist is for bargain hunters. Don’t expect much from market pricing.
Re: Finding Retail Buyers in a Buyer’s Market - Posted by William Flood
Posted by William Flood on May 25, 2007 at 19:36:18:
Peter,
A few thoughts come to mind. First, is reversing your strategy and building your buyer’s list before you obtain a property. That’s best done locally, or at least in a market in which you specialize heavily. If you bounce around, it’s tough to do.
One thing you may have (or may not have) considered is that you might be able to get your cake and eat it too. That is, refinance the property soon after you buy it and take some of your profits that way. Then, rent the property for 5-7 years and refi again - harvesting another batch of equity. It’s a long-term hold strategy, but many people don’t understand that if they buy right there are options for pulling equity out of a deal.
As far as convincing RTO types to buy, it’s worth a shot. Some people are perpetual renters and will be nothing more (even when taking on a RTO). But, many of the same just don’t think they could buy, and if you can show them how you can put them into a home…and more importantly handhold them through the process, they might take you up on it.
As to your last option, I’d exhaust the refi method first as it’s a lot cheaper than taking on a partner. There’s no great reason to give up a large fraction of your equity if you already have the property under your belt.
Re: Finding Retail Buyers in a Buyer’s Market - Posted by Robert
Posted by Robert on May 23, 2007 at 21:22:43:
For selling a note at, or just after closing. The better the FICO the less of discount. The longer you season, the less of discount. The more CASH the buyer has put into the deal the less discount. We do buy notes actively, however we do require a minimum of 6 months seasoning, verifyable. We currently do not do simultaneous closing, although there are some note buyers who do. I will tell you that simos have the largest discount. Location is also a factor.
Re: Does Internet Really Work? - Posted by Ed
Posted by Ed on May 26, 2007 at 13:24:29:
Thanks Pat,
Would you care to share which newspaper ads. work best for you.
Appreciated.
Ed