Wholesaler · Colorado Springs, CO · Member since 2009 · 286 posts · 255 votes
I have a property that I'm trying to sell as a Rent to Own. Does anyone have experience with marketing these effectively? I have a lot of free web postings, some paid websites, local penny-saver, website, and bandit signs. I have two different bandit signs, also wondering if anyone else has good suggestions or alternatives for these. Much thanks!
Are you going to be looking for an "Option Fee" deposit? I would highly recommend it. You could put:
RENT TO OWN
Low Down, $895 mo.
Bad Credit OK.
555-1212
I would try craigslist and maybe the local paper. Also, put a sign in the front yard. 12-18 month's is a pretty common term for a Lease with Option. Also, if I was you I would make sure you can actually get your tenant / buyer qualified for a mortgage in the lease period, if a mortgage broker tells you they can't get qualified in that time you may want to find another buyer. That is if you want to sell fast, maybe you want to carry for longer? Either way, you can ask a higher price for the home with terms like that. Option fee should be 2-3% and non-refundable if your tenant does not buy.
Are you going to be looking for an "Option Fee" deposit? I would highly recommend it. You could put:
RENT TO OWN
Low Down, $895 mo.
Bad Credit OK.
555-1212
I would try craigslist and maybe the local paper. Also, put a sign in the front yard. 12-18 month's is a pretty common term for a Lease with Option. Also, if I was you I would make sure you can actually get your tenant / buyer qualified for a mortgage in the lease period, if a mortgage broker tells you they can't get qualified in that time you may want to find another buyer. That is if you want to sell fast, maybe you want to carry for longer? Either way, you can ask a higher price for the home with terms like that. Option fee should be 2-3% and non-refundable if your tenant does not buy.
Thanks for the replies, I have the mechanics of the lease option (2 years, 3.5% down 'flexible' non-refundable, qualify in 1-2 yrs, rent credit, etc..). It is posted on craigslist every day in the for sale and for rent sections. I'm hesitant to do the local paper as it's around $650/mo. It is in one of the local papers thrifty-nickel, penny-saver, american classifieds genre.
It has only been on the market for a little under 2 weeks. I do understand that this is still very recent. I just want to make sure I have all my bases covered before 2 months pass by and I'm standing there like an idiot waving at cars and pointing to the home dressed in a chicken suit of out shear desperation. It is a townhouse by the way and I know some people don't recommend rent-to-own's on these.
I've had around 15 calls and emails, some which are looking for rentals, some which are section 8, and some which are delirious. 3 showings thus far but no applications yet.
What is your asking price? Do you know what that same home would rent for? Is your monthly rental price in line with what the actual mortgage would be? I wouldn't pay $650 mo to advertise your home in TIME magazine, the sources your using should generate plenty of quality leads, I think the problem is elsewhere.
Is the home nice and clean? Is it in a nice area or a war-zone?
What do you mean by "flexible" non refundable deposit? Do you have equity in the property? As far as not doing a rent to own on a townhome, I don't see an issue unless you had HOA fee's and or a HOA that did not allow a rental. People out here sell condo's and townhomes on Lease Options all the time.
Post your numbers and terms up here, I would be happy to help and I'm sure plenty of others would as well.
Forgot to ask, is your home priced WAY above the comps in the area or just slightly above? When offering terms, it's not important to try and price yourself low but you do need to be realistic. I think 10% above FMV should be fine for a 1-2 year Lease Option.
What kind of feedback did you get from the 3 showings?
Also - on CL - are your ads really showing up or are they being ghosted? Your posting 2x a day every day there ar tricks to doing that - be sure they are not ghosted ads.
I mean flexible down payment not whether it's non-refundable, ideally I'd like 3.5% but if they squirm I'll take half of that. I'm telling people $94,900 which is approx 8% above market price. My rent is $895 where others are straight renting $800-850 and I'm telling prospects $100 rent credit monthly towards the purchase.
HOA does allow rentals, HOA fees are covered in my sub-to debt service of $800 mo., I'm not asking the renters to pay that on top of rent if that's what you're asking.
The townhouse is in an ok area, they look fantastic, great curb appeal, close to Military bases in Colorado Springs which are bringing in another 25,000 soldiers in the next 2 years.
One couple looked at the house for a minute and said it was too small for them, another couple seemed to like the place but they didn't poke and prod too much. They asked for applications but the following day said they didn't think they could do it. Another lady was looking for her daughter, but she did ask if she could re-paint (good sign?).
I'm not sure what is meant by "ghosted" on craigslist. I post once a day (about 8:45 am). I'm thinking it may be better to post around 3:00 so I'm nearer the top when people start getting home from work, thoughts on that approach?
Scott, are you recommending that I post more than once a day per section?
By the way I'm from the Ann Arbor area, I hope the Great Lakes State is treating you well in this market.
Are you advertising what you want for the Option fee or do you tell them when they call? I don't know what a regular SFH sells for in that market (I just know the COMPS you said about other townhomes) but if you can buy lots of homes for under $100k I would think that people that can't qualify for a traditional mortgage may not have the 3.5% for the down.
In my market, a home like that would sell for $200k on a Lease Option and the down would be closer to 2%.
If I were you, I would consider a smaller down to get more available buyers. That doesn't mean your getting lower quality people, you'll still be able to pre-qualify them and pick the best one.
Most people don't walk in and negotiate a down payment in that situation, especially because they're choices are limited. Buyers with bad credit may be a little timid to negotiate, even if they only need to ask for a $500 difference. I would think that $2500 down would be more realistic, based on the sale price. Just my opinion.
I hear what you're saying Jeff. I don't advertise the 3.5% down, in any advertisement that calls for it I say "low down payment, easy qualifying". I only tell people 3.5% if they ask about the down payment and if they seem hesitant or overwhelmed I tell them we can lower that and make higher payments for a while. Perhaps you're right though 2% may be more realistic and I should just start out there.
Scott, are you recommending that I post more than once a day per section?
First I am suggesting you make sure your ads are actually showing up - your taking the time to place them - be sure they show up. CL has tech in place to prevent people from posting to much from the same IP or posting similar ads. Sometimes they tell you and sometimes they "Ghost" your ad. So step one is make sure the time your investing in posting the ads are actually working.
Second I would follow Jeff and Cheray's advice - lower option fee and if your selling for 10% more the current FMV (I think that is what you said) I would reconsider that move as well.
In today's market I think your going to have a hard time conviencing someone it is a good deal to pay 10% more then FMV.
Lastly - look in that area - what are homes going for - personally I am always undercutting similar homes - not charging more - but my goal is to move property.
The suggestions of other posters are great. You want to post on Craigs List every 48 hours and be sure to delete your old post prior to re-posting. This helps avoid the ghosting issue. (But, you always want to check your ads to make sure they are live.)
For the last year, we have been running a Lease Option, Rent to Own program in Atlanta. I have a couple of other suggestions of what has worked well for us.
One, if it is allowed (check your county codes), you might want to try to put some bandit signs in the surrounding area. We've done this with great success.
Also, how many sites other than Craigs List are you posting on? There are quite a few out there and some of them can drive in quite a bit of traffic. (Only 25% of our ad-driven web traffic comes from Craigs List) We post our homes on around 50 websites. One that I've found the owners quite helpful at that also drives in a fair amount of traffic is JSCInvestments. Also, are you using postlets? They will syndicate to other sites for you.
We have had zero success with the local paper and I wouldn't recommend it.
If are on Facebook and have friends in the area where the house is, you can always post your listing to your facebook page. If nothing else one of your friend might know someone that the home would work for.
I am not familiar with your market area, but 3.5% would be high in our market. We usually get around 2%.
I will heed your advice and change to 2% option consideration, again not specifically advertised but only when people ask. I have the ad posted on 10 or so websites. We do bandit signs, approx. 62 of them out today.
The websites I have posted are:
craigslist
backpage
kijiji
ahrn.com
rentals.com
rent-to-own.us
rentals.nationalrelocation.com
realestatecolorado.net
rentdigs.com
coloradosprings.olx.com
I will look into postlets, any more good recommendations on websites?
Andy, did you ever get traction with these suggestions? Have you rented (or L/Oed) the place yet?
Around here the market has slowed quite a bit in the last several weeks. We are marketing quite differently for lower end homes. We are a little below market with option prices, option fees, and rents in order to move property.
Yes, the place filled about 1.5-2 weeks ago. I believe that because it was a townhouse it was harder to move. I think right now houses are so affordable that people would rather go that direction. I got slightly above market rent and 2% down.
Interesting post. I didn't know about a few of those sites (like classifiedflyerads.com, ahrn.com, rentals.com, rent-to-own.us, rentals.nationalrelocation.com, and rentdigs.com). I've received a pretty good response rate with craigslist and kijili--especially for posts with great pics.
Coupule questions for some or the responses to the question in regards to the minimal down payments that are being accepterd for lease options. When the buyer exercises the purchase option do you credit them back the small down payment? Unless the buyer is in a USDA eligible area or is a Veteran using a VA loan then a minimum 3.5% down payment is required to qualify for an FHA mortgage. Is the buyer responsible for the remainder of the down payment at the time of the purchase?
Coupule questions for some or the responses to the question in regards to the minimal down payments that are being accepterd for lease options. When the buyer exercises the purchase option do you credit them back the small down payment? Unless the buyer is in a USDA eligible area or is a Veteran using a VA loan then a minimum 3.5% down payment is required to qualify for an FHA mortgage. Is the buyer responsible for the remainder of the down payment at the time of the purchase?
If they exercise the option then the down payment needs to be applied to the purchase. The idea is to set the tenant buyer up with a mortgage broker right away so that they can monitor their progress and help them clear up the negative items on their credit report. I mention the credit report because that is the main reason they are doing a lease op in the first place.
Now as far as FHA and VA loans, those don't require big down payments as you mentioned but the idea here is to not set up those type of loans. In the past, and maybe people are still doing it you could show 12 months of good payments and that would qualify for a REFI as opposed to the tenant getting a new mortgage.
Another thing is that if the home has appreciated since the tenant buyer moved in (not happening in most of the country right now), they could show the purchase price vs the value and some lenders would count that equity as fulfilling the down payment requirement.
Things change rapidly so double check that info, I have not focused on Lease Options for a while now so I'm sort of out of the loop as far as the lenders flexibility at the moment.
I have a property that I'm trying to sell as a Rent to Own. Does anyone have experience with marketing these effectively? I have a lot of free web postings, some paid websites, local penny-saver, website, and bandit signs. I have two different bandit signs, also wondering if anyone else has good suggestions or alternatives for these. Much thanks!
Home for Sale
phone #
No Qualifying
and
Rent to Own
3bed/2bath $895 mo.
phone#
Hi Andy, we own our property without debt and buy it pretty good so our strategy is to put a sign on the property that advertised either $500 or $1,000 down and $500/month. That's it & we get tons of calls. Our intent is instead of having the buyer put down a huge or customary down payment we start low so they have funds to improve the property since many need repair.
The rent ($500/month) is roughly 65% of local market rents. So bottom line people can see that with a down payment they may be able to own but the monthly is so low it's hard for them to believe so they call our 800 #.
Hope this helps - Colleague request sent.
Danno. . .
It sounds like your problem has been solved, Andy, but just to help out others who are reading this:
One of my mentors has a giant red banner (Probably 7 feet wide and 2.5-3 feet tall) that Simply says "Owner Financing" and then his number that he places over the door of the house. He swears by this approach. Sure, the HOA probably won't like it, but by the time they get around to actually doing anything about it the place will already be sold and the banner will come down.
I'm a newb, but according to him (and it makes sense to me) simply saying owner financing rather than spelling out what exactly it is you're selling will drive more calls. Who knows, maybe someone who wouldn't consider your sign will call and find the terms of your deal satisfactory?
I have a property listed for rent to own but not much traffic. With interest rates so high now, I would have expected calls. I am going to follow the aggressive listing on sites recommended above. Thanks