Am I the Buyer or an Investor????

4 Replies

Does anyone know if we should be presenting ourselves as the Buyer/Tenant Buyer when pitching L/O's to Sellers or should we simply explain to them that we intend to find a TB for their property? I've been hitting a roadblock at this stage because the Seller begins to try to prescreen me as a buyer.

Thanks!

Unless you are a Licensed Real Estate Agent, you are the Tenant/Buyer and/or Optionee.

If you plan on sub-letting the property, be sure your Lease Agreement allows you.

If you plan on assigning your Option Interest, be sure the Option Agreement permits it.

That's the simple answer./

@Brian Snell  

I think this is a great question about the lease purchase or lease option business.

Lease purchase or lease option business planning is got nothing to do with wholesaling (e.g. buying the property as cheap as possible price or optioning the property at the cheapest possible price.)

Lease purchase or lease option business planning has to do with positioning yourself as a problem solver. Your name has to say that you solve problems.

One of the first things I do with my students is to be name their LLC that describes where they are and what they do.

A recent student I had named his company Carlsbad Realty Solutions, LLC.

"Carlsbad" says where the company is located and "Realty Solutions" communicates that he solves problems.

There are 20 million houses the United States that have very little equity, and if you can help the seller sell on terms through a lease purchase or lease with option, and avoid paying a real estate agent and avoid paying closing costs, and do it quickly, there is great value to that. 

But marketing for a lease purchase or lease with option buyer, that's probably underwritten through the Dodd Frank and the Safe Act and TILA and RESPA, that's no mean feat.

Are you the buyer or an investor?????

Well you haven't positioned yourself very well as a problem solver for the seller. The way I position myself as a problem solver for the seller is I act like the MD Doctor in a doctors office. I ask a lot of good questions and try to find out what's important to them. 

I don't tell them where I went to school or how long my company has been in business or any of that crap.

There's an educational component to help in a seller understand all their choices. What I do is I show them in three columns what their choices are

Choice 1. Sell with an Agent and pay the costs to sell and put up with the time to sell.

Choice 2. Rent the property out with a property manager and pay the costs to manage, generally seven the 10% of collected rent, with no guarantees that the tenant will pay on time work you the property tidy and neat and free of damage.

Choice 3. Seller finance the property and help a buyer buy the property for full price without an agent's commission and without closing costs.

Then I explained how they can seller finance. It depends in your state what tools you can use.

In Georgia, for properties that have loans against them, your toolbox includes:
buying on contract for deed
buy on subject to with or without a note
buying on a wraparound mortgage

Controlling with a lease
controlling with a lease plus option
controlling with a lease plus purchase and sale agreement
controlling with a master lease

Your exit strategies can be
renting
renting with option
renting with sale and purchase agreement delayed in the future
renting with ROFR

It's so important you understand basic financing both FHA and conventional. The days are gone when you can accept that option fee without properly underwriting the tenant buyer. Finding an RMLO is NOT easy that will sign off on proving the "ability to repay" but they're out there. Try your REIA Association.

I have a website called
www.selectleasepurchasehomes.com

This three pages is a 

home page

about us page and 

a contact us page

The home page is about a video that I talked for about 20 minutes about lease purchase and lease to own.

The about us page is about "local condition of buying houses and selling houses in my area".  Just state your case about what your mission statement is.

The contact us page is very simple page for them to get a hold of you.

If you are learn how to negotiate with the sellers here is an audio about how I talk to sellers.
LINK

About getting a real estate license:
I think getting a real estate license is really smart when you dealing with tools like subject to, lease options, wraparound mortgages, installment sales, land trusts, private lender funding, joint venture partnering etc.

If you're not licensed and you do a lot of business, you have a lot of complaints from brokers not liking you talking the sellers and buyers without being licensed, and you are going to get some complaints from the Department of real estate in your state. Even Joe McCall and Ron Legrand tell you get licensed if you going to do a lot of business in lease options.

Promotion:
I really believe that being able to promote your alternative finance sloutions is very important. I don't think of promotion as marketing. Promotion is letting people know what you do and why it's a good idea some of the time not all the time. I like the byline,

"I solve problems.... if you don't have a problem please don't talk to me. If you have a problem I will jump all over it."

Some other bylines you could consider...

"I don't want buy your house, I don't want to list your house, I want to lease purchase your house and you get you the seller top dollar without an agent's commission."

On the buyer side of this business you need to be a buyer's advocate as far as helping a buyer get a mortgage. You need to study the HUD.gov website as far as FHA underwriting. I like self-employed people because they generally know how to make money but they don't know how to qualify for mortgage. I also like people that have had a credit problem in the past but they're fine now. It could've been medical bills or even a short sale 3 to 5 years ago.

The kind of home buyers I don't like are those are people that do not like to pay their bills in general and they're not going to be a good rent to own client for me.

Another kind of buyer for lease purchase I don't like are arrogant people that think the world owes them something, there is an arrogance or self-importance to them, they think the laws don't apply to them.

So find the right attitude for the buyer to work in tandem with the sellers is important.

Here's marketing ideas for buyers and sellers.

Marketing for sellers
I like expired leads, listed houses with other agents, FSBOs, landlords, and other wholesalers.

Expireds are the best lead, they want to sell today, so go knock on their door and give them a free report on lease to own.

Listed houses that are long on days on the market (long DOM) are also terrific but if you're licensed you're interfering with the listing so be careful. If you're licensed, talk to the agent, and do a split of let's say you give the agent $500 of your option fee assignment of $3000, and then you split the commission when it sells.

FSBOs a great they want speed and they want full price without an agent

You can come up to them and say

"look I am a seller financing expert
why don't you try to sell it by yourself and I will also market for a lease to own buyer, and if you sell it first great and if I sell it first great

It will not cost you anything Mr. seller, because I will get a fee from the buyer".

Regarding the landlord, a lot of people say this is a bait and switch but I don't look at it that way. I look to buy and rent properties. That's what I do. So I talk to a landlord on the phone to go see the property, it's a great location, I will act like a perspective renter.

As I walk through the rental, I will ask all the questions a regular renter will ask, like,

can you tell me the HVAC how old it is,
what's the average bills in the summer,
what's the average bills in the winter,
I really am looking for a long-term commitment, like 24 months, etc

And then I'll have a flyer in my hand

And I would say,

"Mr. Jones I thank you for letting me see the property and you told me at the rents are 1100 per month, I do want to ask you this one question and if you say no I'll just move on, but what if I could give you 24 payments of $1100 over the course of 24 months,

would you give me the opportunity to buy the property at a price we could both live with,
would that be something you would even think about doing or maybe not?"


As far as wholesalers or "we buy houses people", much of their marketing is thrown away because it doesn't fit the loan-to-value amount, and many of their marketing leads come in as pretty houses being very little work.

I generally call up the wholesaler, and tell them that I'm looking to buy some houses on seller financing, and if they want to make some money with me on leads they throw away, perhaps we could meet for lunch and talk about a marketing arrangement. I sign a a letter stating that I will pay them a certain amount of money per lead that actually creates a transaction, I'm sliding scale, starting at X dollars.

This is all free marketing for lease to own and lease purchase.

You can buy leads at listsource.com or go through @Michael Quarles   @ yellowletters.com

`````````````````````````````````````````````````
Whatever you do be a problem solver and don't be a one trick pony, don't just be a wholesaler. Do something with every lead.

Geez, @Brian Gibbons , that's EXACTLY what I was going to say but you beat me to it! 

=P

Read that carefully people, Brian has taught the L/O gurus how to do this.  Excellent post.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here