Approach towards FSBO's for lease option

General Real Estate Investing
1

I just started approaching FSBO’s in order to secure a lease purchase where I would then offer a lease option on the back end to tenant/buyers. I’ve been running into a situation where the homeowner is asking me “what’s in it for me?” and “how can I as a homeowner make money off of this?”.

Most of the time the homeowners ask for more details and want me to spell out how I will be making money in this situation. The last gentleman that I spoke to said, “hey, if you are making money off of my home then I want to split the profits”. Another gentleman said, “yeah, you can pay me full price for my home now but my home will be worth much more two years from now”. Of course I told this last gentleman that there are no guarantees that home prices will continue to climb over the next two years and that we’ve already seen a slow down in the housing market.

Am I just plain old dealing with non-motivated lease purchase candidates or am I providing too much info to the FSBO homeowners?

Any suggestions/hints/tips/tricks to have FSBO homeowners and for rent landlords contacting me (maybe pre-qualified) rather than me calling from ads that I see on the internet and local newspapers would be very much appreciated.

2

You are just plain dealing with non-motivated sellers. Plus you are not delivering in confidence in either yourself or your business/business plan or both.

Cold calling (or cold approaching) FSBO’s and asking them to L/O their property is not going to net you a lot of deals (but it will get you some great experience in talking with people).

You need some way to determine IF the seller is even a possible candidate for your buying system. That’s why the “we buy houses” ads work. If people call on that type of ad, then they are ready to sell.

If you’re going to be cold calling, then you need to develop a script that will help you determine, quickly, if that seller would even be interested in a L/O transaction.

As to the questions posed to you by customers, they are valid and need valid answers.
What’s in it for [the homeowner]? What is your answer? It should change a little depending on the needs of the seller, but in general, the seller gets the property sold quickly (no more monthly costs), sold for fullprice (no negotiating), and less expenses (no agent fees, closing fees, etc. etc.). Do you cover repairs? If so, then no repair costs. They still get to keep the benefits of owning the property without the hassle.

As to making the homeowner making money, first, is that the primary problem that you’re fixing for the seller? second, if it is, then again, full price sale, no more monthly costs, less closing cost expense, less repair cost expense, etc. etc.

As to how you make money, another fair question, and needs an honest response. Have your basic plan laid out for them. If they don’t like it, then move on.

Raj

3

I had a feeling that I’ve been dealing with maybe’s and non-motivated sellers. I have no problem with the dialogue and usually get to a yes that does interest me or no not interested within 1/2 a minute of talking to the homeowner regarding a lease purchase candidate. The problem is that sometimes the questions get to the point where the homeowner looks to be saying to himself… hey, why can’t I do this myself and skip you?

Nothing against the “I buy homes” signs but they are strewn all over the place where I live and are an eyesore. It got so bad that the county makes people take them down during the week (can only be up on the weekends) at the present time. I’ve watched one person put his sign up and take down one next to him that is a competitor. There have been talks of fines to those that put them up (they wouldn’t have to go far to track you down because your phone number would be on the sign).

So, I’m looking at creative alternatives to advertise to FSBO’s and for rent landlords.

4

The point behind the “we buy houses” ad comment wasn’t to promote the use of bandit signs. The point was the ad gets the sellers that are truly interested in selling (as opposed to the “if it sells, it sells” people) calling YOU. You’ve just eliminated 3/4 of the work that you’re currently doing because you won’t be talking to sellers not interested in your business deals.

Personally, I don’t like bandit signs, for the very reasons that you mentioned. However, the same principle can work in the written word as well.

Raj

5

Raj, thanks. Because of your comments and my experience over the last couple of days (although call me stubborn because I will continue to make the calls), I will be placing a couple of ads in the local paper and am looking into having a professional website (I know html but couldn’t do it justice) put up.

6

Put a e-mail address on your Bandit signs. It will be a little harder for them to catch you and the people will enter the information before you have to call them.

7

Any recommendations besides banditsigns.com for ordering signs?

8

Now, now. I thought that you didn’t like the idea of the B signs? :slight_smile:

Try a local sign maker. I have my yard signs and pointers custom made locally. That way, I can order as many, or as few, as needed and make changes easily, too.

Plus, it gets you more networking and more possible deals.

Raj

9

I’m changing my mindset. I may not like the idea… and I may be putting them out of town but I need to get sellers/landlords to start calling me.

10

So, they’re OK as long as they’re not in YOUR town…?

:eyecrazy:

Got it!

11

Meaning our town has some guidelines set forth that dictate that signs can only be put up between certain hours Friday thru Sunday and must be removed (except those darn political signs) during the week. There are towns around us that allow the signs to be put up and not taken down… of course they mysteriously disappear.

The bottom line is that I need sellers calling me. I’ve been making cold calls and had a couple of leads but either the end price was too high (as compared to comps) or the terms would not work. I feel like I’m slightly ahead of a couple of weeks ago because I now have a website (albeit ugly), I have an 800# for sellers to call with a pre-setup message, and I have an ad starting in the paper this weekend (running for 30 days).

Any advice is very much appreciated.

12

Political signs get to stay?

Okay then, simply put “VOTE REPUBLICAN” (or Democrat) on the bottom of your sign!!!

Raj

13

If you put “Vote Republican” on them, they automatically become a target for the left-wing-save-the-planet-nuke-a-gay-whale-for-some-friend-of-Bill" folks…

14

Okay then, simply put “VOTE REPUBLICAN” (or Democrat) on the bottom of your sign!!!

Or better yet, put “VOTE [republican’s name] or VOTE [democrat’s name] - JUST VOTE!” That should make you non-biased. :wink:

15

How about “Save the Gay Whales”

Sorry, Keith, just had to do it!

Raj