Targeting Tired Landlords with Subject To Deals

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Already this month, my partner and I have closed two subject-to deals; we found these deals by marketing via direct mail and Craigslist ads. I know most investors use letters and postcards to find deals, but not enough investors use Craigslist marketing.

With Craigslist I’ve found that you get the best results if you target landlord’s only, (instead of regular sellers) and you have a very well written email pitching them the benefits of letting you do a lease option or a sub-2 on their house. So that’s my quick pitch for Craigslist if it isn’t in your marketing arsenal yet. And of course, don’t forget it’s free.

Targeting the Motivated Sellers: Tired Landlords

Now, both of these deals were tired landlords who were sick of dealing with rental properties. If there were only one type of motivated seller I could target, it would without a doubt be tired landlords. In fact, over the past 8 years the majority of my deals have come from landlords.

So, with both of these deals we pitched a subject-to…

And the benefits of how they would never have to deal with tenants again, never have to worry about the property again (because we would own it) and that the only thing they had to do for us, was allow us to take over their payments and have the mortgage remain in their name.

Believe me, if you’re new to this business, I know that you’re thinking people will never let YOU take over payments while the loan remains in their name. They will – trust me. The only thing you need is a little sales skill and to know how to answer their objections, which are pretty much the same for every person.

When Should You Take Over the Loan?

However, there is one crucial thing you need to know about doing sub-2’s. You need to decide when you are going to get the seller’s name off of the mortgage – by either selling the property to a tenant/buyer or refinancing.

Most sellers obviously want you to get the loan out of their name as quickly as possible.

Personally, the lowest I will ever go is 5 years. In other words, my contract says something like, “XYZ Realty Services guarantees that on or before March 15, 2016 they will take a new loan on the property and get the loan out of the seller’s name, etc, etc.”

Five years is the lowest I will go, because I want plenty of time to be able to find a quality tenant/buyer who will purchase the house. For the two properties closed this month we got 5 years and 8 years, which works for me.

Of course, get as much time as possible, but don’t lose a deal by trying to get 30 years or some unreasonable amount that most people won’t go for.

Lastly, with every sub-2 you do, make sure you do the closing at a settlement company (and not at a kitchen table) and make sure that you have the right paperwork, so you’re protected should anything go wrong. And if you’ve never done a sub-2 before, then try and do one as quickly as you can.

Most investors will never do one, which means there are plenty of deals for you.

About Author

Jason R. Hanson is the founder of National Real Estate Investor Month and the author of “How to Build a Real Estate Empire”. Jason specializes in purchasing properties “subject-to” and has purchased millions of dollars worth of property using none of his own cash or credit.

9 Comments

  1. great strategy…i’ve done a few deals from landlords and it’s been the easiest sub2 deals by far…landlords understand the business and the techniques so it’s not as much explaining….they also know they can’t afford foreclosure since they generally have a goal to buy another property and try to do better the 2nd time….thus, saving them from foreclosure is a bigger deal than saving your average homeowner who is sick and tired of real estate….i’ve been trying to explain how landlords are a great source for a few months, but couldn’t word it as good as you…great post jason

    • Michelle,

      I only target the “for rent” listings. If someone is listing a property for rent, then they’re obviously a landlord. And I target only mom and pop landlords, not one’s listed with Realtors or big property management companies.

      Jason

      • Thank you for your reply, Jason. After I asked the question, I had the ‘oh, duh’ realization. I had to tweak your e-mail a little for my use, since lease option is not legal in Texas, but sub-to is. This is one simple strategy that I can put into action every day.

        Thanks again!
        Michelle Ellis

  2. Good stuff Jason, I’m dealing with a tired landlord right now and they are a great source of deals. Craigslist is full of tired landlords. The fastest way for a frustrated or distressed landlord to put there property up for sale is to slap a Craigslist ad up.

    I imagine the objection of getting them off the loan happens all the time. Are there other common objections? Can you give some tips on objection handling and detail how you handle this and other common objections? Thanks!

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