Get Past your Fears Invest in Rent to Own Properties(Covid Recovery)

Most tenants considering rent to own properties don’t think they can qualify for a mortgage. The fact is many can’t right at this moment. But this doesn’t mean buyers shouldn’t be preparing for the future when they will qualify to purchase.  There are sellers out there who need to sell today but the new economy and social conditions have them postponing the sale into the future (even if they need cash today).

Sandwich Lease Options Fix All of this Today!

Not being able to qualify for a mortgage today or not being ready to sell today doesn’t mean you can’t help both of them lock some certainty into their future. Confidence in what the future will bring is why rent to own properties have worked in the past, why they work today, and why they will work tomorrow.

Posturing Yourself to Market Rent to Own Properties

Rent to own properties offer the most flexible real estate contracts available in any market. Your point of entry into the business starts by finding motivated sellers. The good news is that motivated sellers need you. That doesn’t mean that everyone wanting to sell their house is motivated but when you do your marketing correctly, you will find motivated sellers that need what you are offering.

90 Conversations in 90 Days

Start your first marketing campaign with one thing in mind – Practice, Practice, Practice. Don’t worry about closing a deal with the first few people that you talk to. First, you want to become comfortable talking to prospective sellers about what you can do for them. That’s why you want to call at least 90 people in 90 days to have the conversation. More calls are even better. Having a marketing campaign that gets them to call you is best. Leaving messages doesn’t count because you are not practicing having a conversation with the person.

You practice and fine-tune the script so that it gets them talking. You don’t over commit in the first conversation you have with a seller and you don’t over promise. You are collecting information first so that you can have a more personalized conversation that fits the needs that are motivating them.

Part of your early conversation uses a script that goes something like “If your house qualifies, I can make an offer quickly.” Then you let them tell you why they need to sell. At this point, you probably haven’t even mentioned that your offer features rent to own properties.

Treat This as a Professional Business

Rent to Own Properties Require a Professional Plan

Don’t try to motivate an unmotivated seller. If they aren’t ready to sell, politely get off the telephone while mentally saying to yourself “next.” Don’t be surprised when you don’t have a seller after the first 10 calls. That’s why you are practicing. Deals start happening around 20 or maybe 30 calls. Anything before that is pure gold. Still, those first 10 callers might call back in a few weeks. Never burn your bridges.

People will start calling you to ask what you can do for them. Maybe they call back on a message you left for them or maybe it comes from marketing materials you sent out. When you are running a marketing campaign, 90% of the calls will come within the first week.

Keep Your Marketing Personal

Have a plan to answer calls professionally and personally. Having a real person answer the call is much more professional and more likely to move deals forward for rent to own properties than having the call go to a message service. When calls do go to a message service, keep the message simple. Let the caller know they reached the correct business and very briefly confirm the marketing materials from your campaign. The only other thing you need is to ask them to leave their name and contact information so that you can call back to have that personal conversation.

While having that personal conversation is the time to begin drilling down into the details about how you can help their circumstances. Don’t start by talking about rent to own properties. First, you want to know about the property they are interested in selling. You want to qualify that they are a motivated seller with a property that you can work with. Ask leading questions and let them talk. When they ask a question, be sure they understand the answer you give them. Your answers should address the issues that are motivating them to sell.

Very quickly, you will know if you have a potential deal or if it’s time to move on to the next motivated seller. They are out there and you will find multiple deals in less than 90 days. You can expect to have your first deal in 29 days or less.

Don’t focus on only one lead. Remember the first 90 days are about practice, practice, practice. When you have the right motivated seller, the numbers will come together.

Spend a $1 to Earn $25,000

There are dozens of ways to run a successful marketing campaign to find motivated sellers. A direct mailing campaign typically costs $1 or less per mailing and bandit signs also cost about $1 apiece. The return on your $1 investment can be phenomenal – often $25K to $30K. That’s because rent to own properties have three profit points. Those profit points are:

1. You make money from the lease option.
2. You make money on the monthly rent.
3. You make money when the house sells.

This is what a $125,000 sandwich lease between Sam the Seller and Bill the Buyer can look like:

1. Your first profit point is the $2,000 difference between the $1,000 option you pay Sam compared to the $3,000 you collect from Bill.
2. Your second profit point continues every month for the next 18 months when you collect $225 more in rent each month (total = $4,050).
3. Your third profit point comes when Bill completes the purchase for $18,950 more than you owe Sam.

Your total earning are: $25,000 ($2,000 + $4,050 + $18,950).

TIP: Don’t agree to make payments to the seller before you have collected a payment from the tenant/buyer.

There are many different scenarios that creative financing and lease options will work for different situations, you just have to know how to properly use them.

By Wendy Patton