I’ve struggled with this for almost two years now and am looking for some advice. I buy distressed homes and sell them on LWO contracts to credit-worthy tenant/buyers. The challenge is actually “finding” those tenant buyers. I’ve done a number of LWO contracts but I can’t seem to keep a good source for finding them. I do pay a Fee for those who find these tenant/buyers and I have found little success from craigslist ads. What I’m searching for is the Holy Grail: ensuring a recurring source of tenant/buyers who are looking for LWO homes they can get using creative financing. I’ve seriously considered starting a Credit-Repair company just to pull them in and show them our LWO properties. How do you suggest best finding those class of buyers?
The buyers will find you if you are giving the buyer a good deal on terms, rates.
There is no holy grail. Properties don’t sell or rent for only two reasons: either no one knows about them, meaning your marketing is ineffective, or your terms aren’t acceptable by the local marketplace.
Barry Wilmeth,
If you post here what your requirements and let the pros give you some free advise of what you are doing wrong.
, through osmosis? I have great Terms and awesome house at a good $$. ads galore and I get: crickets…
I am fairly new to the Marketing of L/O and have to say I share the frustrations of finding the buyers. Fliers, Online Ads, Mailers to Apartments, etc., have done no good. does anyone have suggestions? I thought about local paper, but it would quickly get very expensive to do these ads there…
Post the city the property is in and what you terms are and let someone to see what you are doing wrong.
I put professional signs out front, and post them on Leasingtobuy.com and we work with other sites that pull form ours, so we get a crap load of leads, but keep in mind we still have to sift thru to find decent leads.
Just because someone has the option fee doesn’t make them a good lead…
I don’t use the paper anymore, as it got way too expensive and no leads.
We get a lot of leads from our signs…NOT crappy a$$ bandit signs stapled to a telephone pole…but 18x24 aluminum signs in the yard.
We used to put professional signage in the yards of homes we were seller financing.
We discovered that ugly yellow signs in the yards drew more responses, lowered the resistance to calling us, and just framed our pitch in a more low-key manner. Buyers with iffy credit; that have been turned down for financing, don’t want to deal with some slick operator. Agents represent that to them. And most everyone distrusts agents. So, we don’t try to do that.
BTW, you know who really wants the agents to come across as “slick?” The agent’s clients. Forget that.
We also put ugly, cheapo looking bandit signs on the corners, within a 1 mile of our property, on weekends, advertising the house. BTW, again, your most likely buyers are the same ones already trolling the neighborhood looking for a home. So, local signage is the best ad. Then it’s everything else.
We don’t advertise in the paper otherwise. Just online and in the yard.
The ugly signs on the street corners can work for sure, but in my honest opinion, I think it really depends on the clientele you are looking for, as well as the class of houses you are working with.
After doing this for over 9 years, I’ve gotten tired of dealing with mediocre homes and cruddy people.
So, for me, I find my life is much easier working with high end people and nice houses in nice areas.
I’m not taking away AT ALL from what Javipa said, I’m actually agreeing, but to me it depends on the clients you are looking for.
I have just narrowed my playing field I guess to people that wouldn’t think about calling off a bandit sign.
BUT…if you are marketing a $90k house …a cheap hand written sign is the way to go for sure!
Put that cheap sign in front of a 3k sf custom built home…and it won’t be as effective.
Pilot, I put ugly bandit signs on the lawns of $750,000 homes! :beer
Of course you realize that I’m in an area where this price points equates to a 60-year-old, 3 bedroom, bungalow with galvanized plumbing, right? j/k
I’m not sure there is much that is strikingly out of place and attention-getting than an ugly, hand-written, bandit sign posted in the yard of a beautiful, newer home. And what’s even more striking… 3 identical signs posted next to each other, on the lawn. It’s like rubbing salt in a wound, after pouring alcohol on it, and then rubbing in some sand, it’s so distracting. Of course I make it sound bad. :biggrin
You know who doesn’t like this marketing approach? The neighbors. :banghead
When the neighbors start offering me the $30,000 in cash I want as a down payment, I’ll take the signs down. :evil :evil :evil
HAHAHAHAHAHA!!! I love it!!!
Make your signs so horrid, that the neighbors PAY you to take them down!!!
Just another stream of income baby!!!
horridyardsigns.com
I like it!!!
OK, I am not being a nay-sayer here, but I did do, other than the sign being yellow, everything you guys mention here and still crickets…
- ARE you guys putting out signs even when you DO NOT have a house? I am trying to build a buyers list prior to finalizing with seller OR
- in your Lease agreement are you stating that you won;t start the Lease payments until there is a Tenant/Buyer?
and if so, are you doing say 6 months to find the Tenant/Buyer then renegotiate it if no one comes up?
Thanks!!! :beer
Liberty,
You mentioned this a few days ago. What ‘exactly’ are you doing, again, that’s giving birth to “crickets?”
online ads, yard signs, flyers and mailers about a house up for lease-option. it has great price, good terms… nothing but renters calling about it.
so I am trying to figure out if there are any other ways than those already mentioned in this post to find buyers for this house. Other houses in this neighborhood have sold (all through agents) since we started offering this house…
:banghead
What is the text of your ad copy?
RENT TO OWN IN (subdivision name) !!!
ADDRESS, can be the address you call HOME SWEET HOME!
I am looking for someone who is tired of renting and wants to own this split-level brick home in a highly desirable neighborhood in ####, Alabama. I am offering rent to own terms with a small down payment and time to get your credit repaired with a 2 year lease option. This 3/2 house proudly sits on the corner of 2 cul-de-sacs, giving you a charming setting for quiet time away from the hustle and bustle. With Crest###, Mountain #### and East#### Villages just minutes away, you are close to so much; you won’t waste any time getting to all the shopping and restaurants they have to offer. Sidewalks and mature trees line these streets, along with walking neighbors and children at play. The yard has large trees providing excellent shade, azaleas giving a nice touch of spring color, and Japanese Maples and Hollies accent this homes landscape. Detached storage makes a great place for landscaping equipment and holiday decorations. Roomy, one-car garage is great for your car OR evening ping-pong tournaments! At this price you have room to improve and tailor the décor to your tastes and style. And with a low down payment, making your dream of owning your own home is easy to make a reality! What are you waiting for?! Call Jason now before you are forced to just rent again… 205.602.####
I listed the $$ at $172,500 and the Lease rate at $1295.00 that is going rate for Rent here and the all the other homes in the area are listed (sold home Prices last 6 months is where I got 172.5k) at $205-250k.
Oh, blezz gawd, that’s too much information for any kind of bandit sign…!!! Of course, I know you’re not putting all that on a yard sign, right? I do know that, right? :shocked
Let’s trim this baby down to something effective…
Assumptions:
- You own/control a house.
- You’re offering “seller financing” via a lease/option/rent-to-own.
Backing up the trail a few feet…we need to analyze the amenities of property to determine the exact buyer that will most want this house.
Every house was designed to appeal to a certain buyer. Custom built homes are especially designed to appeal to one buyer. So what buyer is your house going to appeal to most? To answer that, let’s review the features and amenities the house offers.
List of features and amenities:
3 beds, 2 baths
Corner lot on culdesac
x streets of Crest###, Mountain #### and East#### Villages
Close to all the shopping and restaurants
Sidewalks
Mature landscaping line these streets
Child safe
Detached storage
Large trees
Excellent shade
Azaleas Nobody
Japanese Maples
Holly Trees/Bushes
Detached storage
1-car garage
Low down
Under-retail price
Call Jason at 205.602.####
Price $172,500 Comps $205 to $250k
Rent $1295.00
OK, this house is going to appeal to a family with pre-teens that are moving up from a 3/1 or 2/2, or moving in from another area.
It’s not going to appeal to:
- Empty nesters, because there’s too many bedrooms, too many noisy, bratty kids and teenagers, and it’s a corner lot with “lots” of maintenance issues, and only a 1-car garage.
- Large families, because there’s only three bedrooms, not four or five bedrooms and only a 1-car garage.
- Single persons, because there’s too many bedrooms, too many noisy, bratty kids and teenagers, it’s a corner lot with “lots” of maintenance issues.
- Newly marrieds,because there’s too many bedrooms, too many noisy, bratty kids and teenagers, it’s a corner lot with “lots” of maintenance issues and only a 1-car garage.
- Retirees, because there’s too many bedrooms, too many noisy, bratty kids and teenagers, and it’s a corner lot with “lots” of maintenance issues.
- Families with small children, because neither the front or backyard is fenced (despite the neighborhood being “safe for kids.” There’s no such thing as “safe neighborhoods” today; only safe, fenced backyards. Then there’s the mention of poisonous plants. The mere mention of Holly trees conjures up a dead five-year old on the front lawn, frozen, reaching for Holly Berries, with his now-rigormortised arm. And (drum roll please) there’s only a 1-car garage.
Conclusion on Analysis:
We want to appeal to the family with two kids between 9 and 12 years old that won’t “need” a fenced yard, and won’t eat Holly Berries.
The one-car garage situation is “fine,” because mom and dad both work, and they’re always using the car, so a garage is only critical for storing crap, not parking cars.
The fact that the streets are lined with mature trees, and there are colorful flowers and the rest is just “extra” but not deal makers. Those are things we reserve for our long form advertisements.
The actual deal makers here (after the amenities have been sifted through) is:
- Seller financing offer to a credit challenged buyer…
- The payment…
- The down payment…
I could go through all the elements of a bandit sign, but I’ll just cut to the chase and offer what I know works, based on my analysis of what you’ve outlined.
Rent To Own! No Qualifying!
3/2, 1,309 sqft. $1295/mo.
$8k Option Fee, Great area for kids.
Mature landscaping. Roomy Family Room
Call Jason Today at 205.602.####
Notice I didn’t mention the sales price? I don’t want “bargain hunters” calling me. In fact, I’m setting the price to today’s retail value of $250,000. Otherwise why give a bargain price, to someone needing help financing?
The ones with fewer options, are the ones that only pay attention to the payment and the down payment. If these are workable, they’ll give us the rest of what we want. Buyer’s that fit our profile, don’t care about the price (at least the ones we want to attract and pitch). So, the price is “retail.”
I want people who…
- Want to own a 3/2 home
- Want room to live
- Want a place for their kids to spread out
- Can afford $1295/mo
- Have $8K in Option Money
- Needs temporary seller financing
- Appreciate bargain terms (for a credit challenged buyer)
I don’t want…
- Tire kickers with only $1000 for Option Money…
- Folks who can’t afford more than a $1000/mo.
- Credit dead beats…
Now the question comes up, "Why advertise “no qualifying” if you’re going to “force” the tenant/buyer to get his own financing in just a few months. What happens if he can’t qualify for a loan?
Few buyers are going to give us $8K unless they’re fairly confident that they will get financing. Once the prospect knows that we are offering this deal for only 24 months, he’ll have to determine if this is worth the risk.
That said, if our option price is not over-retail (in this case it should be “retail,” and not a discount) then any tenant/buyer with OK credit should be able to qualify for his own financing and exercise his option.
Of course, the types of financing he’s going after is a clue to his success. FHA, or conventional have different qualifying requirements. So this has to be accounted for in both the terms and advertising ad copy, if not the overall expectations.
We think it’s wrong to knowingly put a tenant/buyer into a house, that he’ll never qualify for. Failed buyers spread the word about our businesses, and then it just pours sand in our gears long term. So, even though we don’t do a credit check, we do ask some questions, and then move the deal to where it will work for everyone.
That all said, we should be sending our buyers to our mortgage broker for an evaluation, to make sure our buyers can perform in a timely manner, and give us an idea of what to expect. It’s all about negotiations in this business.
Thanks for giving me a chance to create another blog post!!!
uh yeah, that was the online ad… :beer
Bandit sign, said LEASE PURCHASE, CO LOGO, PH # and some details:
3/2, bonus room, 1 car garage, $1,295 per month, LOW DOWN.
I didn’t put mature landscaping as they would see the landscaping right there, being in front of the house. I used LEASE-PURCHASE directional signs to get people there.
So then other than bandit signs and hoping they are driving the neighborhood, do you have any other ways to target the small family with kids 9-12?
- Also, this area only good for kids that go to private school(keeping my pool buyers smaller).
- the area is filled with first time home buyers out of college and still wanting roommates to share burden of cost.
- also, empty nesters/retirees from the rich neighborhood a few blocks away who want to stay in the area but not be burdened with the heavy tax load.
- Seems like a great location for newly divorced wife or husband that the other lives in the rich neighborhood and can keep kids in school there??? networking with divorce attorneys??? :rolleyes
I appreciate the help, but other than some wording on the bandit sign am I not already doing what you are suggesting??? other than the wrong assumption about $$ of the house. raise the $$… :bobble
Could I be shooting myself in the foot being the lowest price house??? :banghead
Yes, to your last question. Don’t mention the price. It’s not the focus of your benefit. Your price is NOT the benefit. Your terms are. Also, you’re retailing this house, not “wholesaling” it.
OK, so you have considered several other Buyer-types. That’s good.
Frankly you want the husband/wife/kids combo package. Not the "looking-to-live-with-room-mates-in-a-divorce-situation, or “I’ve got more than a dysfunctional credit situation going on” type.
Maybe I’m jaded now, but “low down” just attracts those with no money. I don’t want those types calling me. So, I state the down payment/option fee I want, and negotiate to get it.
Meantime, buyers will move mountains to get the cash we’re asking for (in theory). So trolling for prospects that don’t have any money is a losing proposition. Not only that, but you hit the nail on the head, that “low down” smacks of “low budget.” I’ll go so far as to say it often sounds cheesy to me.
The credit challenged ALREADY know the routine. They know they’re gonna pay more in price, or terms. So, we offer what they expect; absolutely fantastic terms. I mean if the buyer can give us 10% as an option, or down payment, do we really need to check anyone’s credit? Buyers don’t give us thousands of dollars unless they know they can perform. Buyers are motivated, but rarely stupid. (I say rarely.)
Things ‘can’ happen, yes, but I’ve got $40,000 of “insurance money” in my hands!!!
You didn’t mention the bonus room. Don’t tell me this place has a pool, too? Or granite counters and stainless steel appliances? :banghead
Again, we’re offering great terms in return for paying retail (plus, in some cases). So, we advertise the terms, not the price.
BTW, nobody knows what a “Lease Purchase” is. So we use, “Rent To Own,” in our ad copy. We use “Lease Purchase” when talking to sellers, if we ever use the term Lease Purchase. Just saying.
So, if there was any adjustment to your Bandit Sign ad copy it would be to emphasize “No Qualifying.” If you really want to get some calls, write “No Credit Check.” In fact this phrase will get you deleted from craigslist, despite being completely honest and verifiably true.
I stopped using “No Credit Check” on craigslist as a result. And use anything else that communicates the same thing. “Nobody will check your credit” “I don’t do credit checks” “Your credit is great with me” Can you fog a mirror? You qualify!" etc. etc.
Ron Legrand suggests not asking for a particular down payment, but asking for the same thing you did; a “Low Down.” And then when the prospect calls, you just never accept what they have, but ask for more.
We’ve done this. It works, OK. However, we’ve found that just asking for 10% down works, too. We can always accept less, but it’s a special negotiating circumstance to ask for more.
Prospects might say they only have half of what we want. So we ask how long it would take them to get the rest of the money. This gives us some wiggle room, without just disqualifying that prospect. Sometimes, we’re happy to take half… Just saying.
Now, the question is, why ask for 10% down for a “rent to own” prospect. If they had 10% down they could qualify for conventional financing. No, that’s not always true. You can’t have bad debt, late pays and nick and scratches and get financing, even with 10% down. Of course the less you ask for the more buyers will have the money, yes. However, when it comes to qualify for financing, your buyers need to have 10% invested in the property to ensure they get financing (assuming the credit has been cleared up).
Anyway, focus on the terms, the benefits that will resonate with a particular buyer, but not the price. :beer
Does that help you at all?
makes sense, got to start paying attention to my own metrics. No response on Lease Purchase ads and many responses for Rent to OWN ads on Craigslist, SOOOO use Rent to own with Buyers!!! duh.
I see your point on “LOW Down”. Plus, if you say Low down and then ask for $10k, could piss someone off and thus be wasting everyone’s time… tire kickers thinking low means 0-500 bucks.
no on the pool. if it did I would have moved there myself.
BTW, are you structuring your Lease-Options with sellers to assume no payments on the Lease until Tenant Buyer is found???