Investor · Toledo, OH · Member since 2012 · 292 posts · 35 votes
Hi;
I'm targeting landlords for lease option deals. Not all of them want to give up their income stream, so for a seller who wants the ongoing rental income I'm planning to help them buy another house.
Do you guys know any strategies for buying a house at 90% of retail value (I've heard this being called "retail net")? The standard wholesaling model at 70% ARV and below is VERY difficult now in So Cal, but I don't need that big a discount anyways. I've heard you can door knock MLS listings to offer "retail net" but that seems like it could be a breach of contract for the seller
Buying a home at 90% of retail does not offer enough room for a rehab flip. So you must implement a different strategy like landlording. If it can cash flow at that price, then it may make sense. If you can buy creatively with owner financing, sub2, or similar, it can be a deal for you. Master lease options would be another option.
In my area, 90% of ARV is as easy as making offers on every MLS property. You'll probably get 5% of sellers who will take that without much negotiation.
Buying a home at 90% of retail does not offer enough room for a rehab flip. So you must implement a different strategy like landlording. If it can cash flow at that price, then it may make sense. If you can buy creatively with owner financing, sub2, or similar, it can be a deal for you. Master lease options would be another option.
I'm not familiar with retail net, but you will surely attract sellers if you're willing to pay near top dollar. It sounds like you need to target properties which have below market rents. Base your offer on the current (low) rents. Once you have the property under control raise those rents and enjoy the cash flow!
If your goal is to buy directly from sellers, I certainly wouldn't advise soliciting MLS listings (unless you're willing to let the agent keep their commission). If you do go this route, you might start blasting the agents with a well thought out pitch that describes your model thoroughly. 90% of them won't understand what you're talking about, and of the 10% that do, very few will actually want to work with you, but if you have nothing better to do than I would say go for it.
I agree with avoiding agents on deals like this,nylon need to find the sellers yourself or frustrated landlords and work creative deals out with them. Marketing to agents would likely be a waste of time like Jake pointed out.
Sean D if you approach owners whose listings have just expired I would imagine you'd have great success. If the home was listed at market value, the seller is saving 6% by cutting out the realtors. You're over halfway to your 10% goal so negotiating 4% off should be pretty easy for most homes.
Sean D if you approach owners whose listings have just expired I would imagine you'd have great success. If the home was listed at market value, the seller is saving 6% by cutting out the realtors. You're over halfway to your 10% goal so negotiating 4% off should be pretty easy for most homes.
Possibly, keep in mind that everybody and their Mothers are doing this so competition for expired listings is fierce, including other agents marketing to same.