Posted by John on July 10, 2003 at 15:41:29:
Be careful “stipulating” things in a land contract that contradict state law. Just to be clear, you can’t simply stipulate that the house will revert back to you if the payments aren’t made, unless your state specifically allows it. In other words, your state’s statutes dictate what you can do, not your contract.
What am I doing wrong? - Posted by NCHomeGirl
Posted by NCHomeGirl on July 09, 2003 at 12:32:31:
I’m trying to lease/option my personal home here in Charlotte, NC and have advertised with flyers, newspaper ads, and “Rent to Own” signs. The signs have been the most effective; however, it doesn’t provide any pre-screening and filtering out of the “non-qualified” buyers. I get tons of calls, but mostly from people who have a renter’s mentality (e.g. wanting to rent vs buy, not having enough down payment, rent payments too high, etc). I have been able to get a good buyer’s list for future homes. Here are the details: Purchase Price: $134,900; Rent: $1050/mo; Option: $3,000+; I’m not offering any rent credits unless a higher rent can be paid. The house has been on the market for a few weeks now. What am I doing wrong? Should I take another approach? What’s considered to be a good profit margin on a L/O? Thanks for any help!!
You’re ugly and your mother dresses you funny! - Posted by Jim FL
Posted by Jim FL on July 09, 2003 at 14:58:52:
NC-Home-Girl,
Sorry for the subject line, I’m feeling surly today!
What do your advertisements for the house say, specifically?
Signs, flyers and news paper ads are all I’ve used to sell my houses with owner finance or lease option over the last couple years.
It has taken me a little longer to fill them and get the numbers I want…but that is okay, because I buy right in the first place.
When I market a house for sale now, I offer it, “Owner Finance, Bad Credit Okay, Nice 3 bed/2 bath, $xxxx/month, Call xxx-xxx-xxxx”.
Now, I know you said that you are selling with a lease option.
Think about this for a minute first though.
What IF someone came to you with say 10-20% down and wanted “Seller financing”.
Would you consider it?
I’d think so, you are willing to lease option.
Now, what about the person who called because they saw, “Owner financing”?
When they do, tell them you require a credit “Review”, and a minimum of 10% down, IF they qualify.
How much do they have to put toward their new house at the moment?
Oh, it is less than the 10%, well then what do they have?
3-4-5%?
Good news mr./mrs potential buyers, while you are not quite qualified for our “Owner Finance” program, with what money you have now, we can place you into the house with one of our alternative programs, provided you are honest with us and understand that you must pay ontime to remain in the house.
I do this, and do sell several houses on contract, and some on lease option these days.
OWNER FINANCE makes the phone ring…how you handle it from there is up to you.
Just my two cents,
Jim FL
Re: What am I doing wrong? - Posted by Ben (OH)
Posted by Ben (OH) on July 09, 2003 at 13:54:16:
I think that your numbers look attractive and would agree with the two other posters. I think that one thing in particular to do would be to raise the purchase price and offer some rent credit. In my market, $1200 vs. $1050 would eliminate some people, but you really should be near the top of the rents for this kind of deal (and that sometimes screens out mr and mrs LookyLou–but also sometimes screens out folks you might want to be talking to)–so, stick to $1050 if it’s a fair price that you’re comfortable with. Consider upping the price to $139,900 and giving ALL of the extra $5k away in credits–people want to know how much per month and how much down today. Few are savvy enough or even care enough about the eventual purchase price, but it sure feels nice to stop renting their own house and earning credits toward owning…
On the whole, I think it’s a relatively difficult time to be doing this with the very low interest rates and awesome incentives and programs folks have out there. You scrape the bottom of the barrel in terms of prospects some times (poor credit, BK, general financial foolishness), but if the house and location are ok, sounds like the price and the deal is fair–and you should find someone if you stick to your guns (and tweak the deal as I’ve described).
Re: What am I doing wrong? - Posted by gerald(tx)
Posted by gerald(tx) on July 09, 2003 at 13:03:04:
One of the drawbacks of selling L/O is that you attract the renter mentality. This is why I no longer do L/Os, but rather just Owner Financed sales.
Try your ad something like this in the For Sale section: “No Bank Qualifying - Owner Financed. Nice 3/2/2. $5,000 total down. $1200/mo.”
Notice I didn’t include price in the ad. You can get a higher price, more down and more per month if the buyer has the buyer’s mentality of actually buying the home. It may be mostly psychological, but it sure does work. It accomplishes the same thing, but the results are better. (you can probably sell via CFD in your state)
And you can apply your personal standards for qualifying, since your ad said “no bank…”
Also don’t try to screen out everyone on the phone. You don’t know how many times the couple comes over, falls in love with the place, and suddenly figures out a way to come up with more down, etc.
Hope this helps.
Re: What am I doing wrong? - Posted by Trevor
Posted by Trevor on July 09, 2003 at 12:56:25:
Hi,
You stated the house has been on the market for a few weeks. It normally takes a month and longer to find a good tenant. Don’t rush the process. Take your time. Eventually you will a reputable tenant. Good luck!
Trevor
Re: You’re ugly and your mother dresses you funny! - Posted by NCHomeGirl
Posted by NCHomeGirl on July 09, 2003 at 15:29:07:
Thank you all for your advice! My latest ad reads: “Rent To Own. Easy Qualifying. Lovely 4 year old 3 bedroom/2 bath, fireplace, double garage, vaulted ceilings, near UNCC area. $134,900 $1050 per month. Low down payment. Call owner xxx-xxx-xxxx”. Am I giving too much upfront info in this ad? I haven’t received any calls from this particular ad, but have received calls from the signs and a more general newspaper ad (without the sales price). If I get and sell to a T/B on these terms I stand to make a $21K profit. However, if I sell at $1150 and $200 rent credit, I can still make almost $20K profit. Also, my PITI is $950. Am I on the right track with my numbers? I’ve seen where 10% rent credit is good, even though my numbers are a little higher.
Re: What am I doing wrong? - Posted by Scott
Posted by Scott on July 09, 2003 at 18:32:41:
Gerald, When using your owner financing methods, how do you structure the deal so there is no DOS from your current lender? I like the sounds of this, but, honestly, don’t have capital to buy houses cash.
TIA,
Scott
Re: You’re ugly and your mother dresses you funny! - Posted by Tom-FL
Posted by Tom-FL on July 09, 2003 at 16:43:44:
Cringe Cringe Cringe
This is off the topic you were inquiring about but I think it needs to be said. You are mixing rent and sale info in the same sentence several times here. If it confuses me, it will certainly confuse the lay person looking for a house.
You start the ad with “rent to own” then immediately mention “qualifying”, term generaly used for loans. Then in sentence three, you mention a sales price and a “down payment”. Landlords don’t take down payments, sellers do. Then later, after the ad, you said “if I sell at $1150 and $200 rent credit”. Again, you’re not selling, you’re renting, until the moment they exercise the option. Why am I bringing all this up. Because this a lawsuit waiting to happen. If someone thinks they are the “buyer” instead of a tenant, then as soon as they stop paying, they’ll be starting trouble with you. You need to be clear. This topic was just dissected thoroughly in a post yesterday:
http://www.creonline.com/wwwboard/messages/78242.html
That post was in response to this one:
http://www.creonline.com/wwwboard/messages/78188.html
This is not a quick skim over. It’s a long read, and in places re-read. So make sure you have some time set aside and cup of hot toddy at your side. Or print it out and take it along somewhere that you have reading time.
Good luck. Get someone in there quickly, just make sure they know they’re renting.
Re: You’re ugly and your mother dresses you funny! - Posted by Jim FL
Posted by Jim FL on July 09, 2003 at 16:15:39:
NC-Home-Girl,
Frankly, rent credits are not something I offer, EVER.
I will only give them when a T/B’er brings it up, and negotiates for them.
Meaning, they must put some nice cash upfront, and agree to a good price for me, before rent credits are given.
Most don’t ask though.
I don’t really see a problem with your ad, other than you are advertising the house rent to own.
For some reason, houses over the last two years seem to be selling slower with this method.
Probably due in large part to lower interest rates, and the fact that anyone with half way decent credit and cash can just get a loan to buy.
Here is what I do to market my houses now, using the “Owner Finance” tag line at the top of everything.
I place signs in the yard of the house, as well as a flyer tube with pictures of the house, and details, along with my phone number and web address.
I also place flyers and signs in the front windows of the house, in case the signs in the yard go AWOL, or the flyer tube becomes empty before I can refill it.
My signs would say something like this:
Owner Finance
Bad Credit Okay
3 bed-2 bath-$xxxx/mo
xxx-xxx-xxxx
Same with flyers.
I then place directional signs at the intersections near the house, pointing to it, as well as at major intersections leading to the area.
Along with that, flyers at the local major discount department stores, on thei bulletin boards, with tear off srtips which have my phone number.
I place those flyers on bulletin boards, phone booths, vending machines, and any other flat surface that people walk past every day, all day.
I also use, and these are the BEST results wise for me, road side signs, which have the same message as my yard sign.
I usually place between 5 and 10 of these out for each house, in the area near the house, and major conveniences closeby.
I’ve sold my last 5 houses from these signs alone.
You might even think about making up a black and white flyer you can fax.
Send this to local mortgage brokers.
They might have someone who cannot get a loan, “just yet”, but has cash and wants a house NOW.
The broker sends you the buyer, and you send them back when it comes time to get a loan.
Also, fax your flyer to human resource departments at major employers for the area.
“Relocation special, rent to own, No qualifying etc. etc.”
Bottom line, if you are not getting results, one or two things are stopping you from filling the house.
Either the numbers are too high, or you are not getting the message out about the house to enough people.
Good luck,
Jim FL
P.S. I’m glad you took my original subject line as humor, as it was intended.
Re: You’re ugly and your mother dresses you funny! - Posted by NCHomeGirl
Posted by NCHomeGirl on July 10, 2003 at 12:47:14:
Again, thanks for the advice! I had actually read these articles a while ago, but thanks for reminding me of them. I’m going to change my ad so that I don’t mention purchase price and change the “low down payment” to “low money down”. I have the Louis Brown course and it has very solid contracts. Are there any L/O courses that step you through the necessary steps (advertising, when to set purchase price, negotiating, scripts, etc)? So once I find my tenant/buyer that accepts the monthly rent that I propose, at what point do I mention the option consideration and the purchase price? I know both are stated in the option agreement, but I’m not sure at what point I should bring it up to my prospects. Thanks Again!!
Re: You’re ugly and your mother dresses you funny! - Posted by AC
Posted by AC on July 10, 2003 at 06:32:11:
Jim,
When you sell on land contract, are you taking the tax hit all in the first year? Additionally, if the buyer gets behind do you foreclose or have stipulated in your land contract that the property reverts back to you?
Thanks
AC
Re: You’re ugly and your mother dresses you funny! - Posted by Tom-FL
Posted by Tom-FL on July 10, 2003 at 17:54:16:
>> change the “low down payment” to “low money down”.
Or, low move in, easy move in, something like that. Personally I wouldn’t use the word “down” at all.
>> at what point do I mention the option consideration and the purchase price
Mmmmmmm, however the conversation flows, I guess.