Lease option investing, is a real estate investing strategy which has been around for years. Through all the turmoil and rapid changes going on in the real estate market this strategy has lasted the years. It is simple which makes it a good.
You find people who have their house for sale or rent by owner. You contact these people and offer to rent their house with an option to buy it a few years down the line. You find someone willing to give you low rent and sell you the house at a cheap price. You then find someone to lease purchase the house from you. For a higher monthly payment and greater final sale price.
With this method you have three paydays. First, you get a large up front deposit from the people to begin the lease purchase process. Next, you get a spread on the monthly rental payments. Finally, you get a big payday when they purchase the house.
At the end of the day this strategy can be very profitable, if done right and know what pitfalls to look out for.
Finding Leads For Lease Option Investing
The simplest and cheapest way to get leads is cold calling/ emailing. The key is to find people who are trying to sell their homes by owner. You can find these leads through craigslist.org, fsbo.com or calling expired listings. These three sources should provide more leads than you can handle.
To get expired listings your best bet is to make friends with a realtor and get them for free. Or you can buy the list from several list brokers.
Script For Lease Option Investing
Call the number they advertised and say:
“Hi, (insert your name), I see your house is for sale… would you consider renting it to me for a couple of years and letting me buy it later? You know, a rent-to-own?”
The line is very easy and not invasive, you are calling people who want to be called. The worst they can do is say no and you move on.
Around 30% of the people you talk with will say, yes. To everyone who says “no”, politely thank them for their time and hang up.
To the 30% who are interested in renting their home to you, ask them “How much rent do you need?”, 30% will give you a rental price you can work with. For those who ask for too much rent, thank them for their time and move on.
To the final few who are willing to rent you their house at a reasonable price, find out when you can see the house. Tell them the you can come by today or tomorrow and 6pm, ask them which time is better for them.
Once you have set a time to meet with them tell them that you have a rent to own agreement for them and you want to email it to them before the meeting.
Complete the contract and send it to them.
If you follow this precisely you will go into contracts with around 1% to 3% of the people you cold call.
This will be the hardest part. It will take time and experience to know you have made the right decision. For the time being practice.
To determine rent go to Craigs List and pull up all the rentals in the area. On your first deal you should go to all the rentals in the area and compare it to your subject property. I would shoot to get an additional $200 a month from from the rent. Thus once you know what you think you can rent the house for, try to get the owners to give it to you for $200 less.
I would recommend doing the same thing to determine how much to offer on the house and sell it for.
Finding Renter When Lease Option Investing.
Place ads on craigs list.
Look at what other people are doing to find lease option renters. Just type lease option and the area into craigs list. Find an ad which looks good to you and copy it.
Purchase some corrugated plastic signs and a fat permanent marker. Write on the sign:
Rent To Own
4br / 2ba
Place around 20 of these signs around the house. Entrances and exits to the neighborhood, major intersections, highway on and off ramps and anywhere else you see other people putting up signs.
I would leave a google voice number on the sign.
Leave the following recording for people to hear when they call the number.
Rent to own your dream home with no banks involved! Key features and benefits of the house. You can OWN this house with bad credit, no credit or even good credit. All you need is $10,000 down and $rent price per month. Drive by house address and if you like the house and the area send me a text message requesting an appointment to see the house.
When you first talk to the potential buyers ask them, if they have driven by the house. Ask them if they have$15,000 in their bank account right now. Ensure they are comfortable with the rent price on their current income.
If they do not answer yes to all these questions, tell them to call you back once they have done what they need to do.
Next, tell them you can show them the house today or tomorrow at 6, which works better for you?
Once they have a time to meet you at the house. Tell them to bring their check book for the $1,000 deposit for you to hold the house. In addition to the $50 cash application for each adult living in the house and co-signer.
Submit the applications to a mortgage broker and see how long it will take until they can get a mortgage.
Pick the most qualified one.
Call the lucky winners up and tell them.
Congratulations! The house is yours, I will need to get the rest of the $14,000 in certified funds by the end of the week and first months rent at the beginning of the month when we will meet at the house and I will give you the keys to you new home.
You have just finished your first lease option investing in real estate congratulations. Now start over from the beginning and get more lease option deals in the pipe line. Soon you will be successful in you lease option investing.