homes with little equity? lease option?

General Real Estate Investing
1

Well I got my bandit signs out, and got my preforeclosure letters going out.

Sorry for asking a dumb question. I truly have read almost every thread on this forum for the last 7 months and most of the articles on this site as well. I understand the general idea behind the lease option but am wondering if this is where I should start using it.

I am getting alot of calls from motivated sellers who want out but have little equity, 20-30k at most. Not enough room to buy, rehab, carry, sell and make a profit. Houses are 120-150 ARV usually. For the time being I have been telling them to call other investors and the ones with the bandit signs that say owner financing etc, etc. Good think is I have been doing this for only a week so I may have lost a deal but I realized quickly I need to try to change this.

Soo… I was thinking these are the houses I should be lease optioning right if I get them sub 2 Am I correct on this theory?

If so, how do I build a buyers list? more bandit signs looking for bad credit home buyers? ads in the paper? am i on the right track here?

2

20-30 k is good for me to do a sub 2 as long as all the numbers work with back payments, rehab and other things.

don’t pass them on if you can do it yourself, it sounds like you need to read a little more. the way that you will build that buyers list is:
when those people call you to sell their house have something ready to ask them a few questions like: how many beds and bath are you looking for, what area/s are you looking at, how much can you put down, how much payments can you afford and some other stuff (what ever you want) just keep it short.

and yes any advertising that you do is great newspaper ect. just keeptract and see which one is working. Good luck & God bless

3

You’re actually missing alot of potential money simply by telling them to call another investor. Not only are you creating for yourself a bad reputation by rejecting potential clients, but you are potentially losing a birddog fee because YOU should be the one calling another investor.

Raj

4

REI to be your loosing so much profit.

I work with deals every day where I only have 15K profit spread.

and your getting 20K 30k and letting the deal go?

Your crazy!

5

If your getting 20 30K discounts, tell them you will put the house under a non-exclusive option agreement for 30 days at the lowest price they will accept.

Now you try to sell the house for FMV and make 20 - 30K profit.

Make sure you include in the option agreement that the seller agrees to pay the difference of the sales prices at closing.

This is my current gig as I offer up to 95% FMV to my sellers and I get contracts signed left and right.

You walk up to a foreclosure house with no repairs and can only work up to 70% LTV, I can offer up to 95%, whose going to win?

:slight_smile:

6

I said 20-30k in equity, not profit. Arrears need to be paid, repairs need to be done, etc,

Like I said, theres no room to buy, pay closing costs, sell, pay closing costs and realtor fees, etc etc.

Also keep in mind there are about 90,000 homes on the market around here and I dont think that includes FSBO.

How do you make the seller pay the diference of the sales price? I dont understand that?

7

Why not try shorting it?

8

if u sell these homes on terms using creative methods, no credit check, sizable down pmnt, 2 yr CFD or L/O, u will win well in the end becuz chances are the house will be worth more than the $20-30K equity it has now. who will win in 2 years? both u and your buyer. your buyer gets a house they signed a contract for 2 yrs ago and have lived in with pride and you get the $20-30k in equity plus a 2-5% appraisal increase when your buyers buys or refi’s in 2 yrs. sounds like a steal to me.