What effective stratigies can be used to break the owner to do a L/O ? Most people dont want to consider it… What is the key monthly amount to do a lease option on lets say a duplex that is already rented ? say 700 ea side . How do u convince them to consider L/O , KEY: they are behind on their taxes and a lien will be put on shortly… apprasial was 206,000. amd assesed at 144,000. Everyone please share your stratigies !!!
You have a seller in pain. Your job is to soothe that pain. It will probably take enough up front to bring the taxes current, and leave the seller with enough extra money to feel good about doing the deal.
When I work a deal like this, I emphasize the fact that the owner will retain the tax benefits of the property for the term of the L/O. In extreme cases I have even bumped the monthly rent I am paying to cover the owners homeowners insurance, sharing the PCF.
Keep in mind that although we are all in this to make money, being greedy will not solve any problems for our owners in distress.
I’m no expert, but I only lease option/purchase from sellers that are not in trouble. If you deal with sellers who are in trouble they can cause more damage to the title ie. additional liens, IRS liens, Open Credit Lines, etc. You can always cloud the title by recording the option, but it isn’t a fail safe. Under these methods - you don’t own the property.
To deal with sellers in trouble I will want to get the deed so they can’t encumber the property anymore. Their Financing may be in place, but I own the deed.
Just my view
KEC
Hi Iwinuwin, nice to meet you.
How difficult is it to get a distressed owner to sign over the deed? Do you purchase it outright in a wrap, sub2? Just curious.
Recording the transaction just opens up everything you’re doing to public record, although it may provide a degree of protection. Just not sure I want the whole world meddling in my business, that’s why I like investing.
If I needed someone looking over my shoulder, telling me not only what I could or couldn’t do, but how to do it as well, I’d simply get a job.
Thanks KEC I see your point… I must figure out a fair price as a straight sale i guess. Any other creative fiancing or ways to obtain this property are appreciated… Letter on intent i guess is my next step…
sub to’s will work. If you don’t record the deed the property could be hit with additional liens. Yes the world will know and maybe even the seller’s lender may find out which I’m sure they wouldn’t be real happy about and could call the loan (which from what i understand almost never happens-especially if there getting paid).Depending on how distressed the seller is he may be happy to sign over the deed and even give you your choice of relative to take with you…lol. Motivated sellers not distressed sellers will also sign over the deed as long as it makes sense. By motivated I mean someone who has purchased another home, but hasn’t sold theirs yet.
I usually buy outright and lease/option to my buyers. I can’t do the number of deals others can with the sub to’s or lease/options or lease purchases as I only have x amount of cash to work with. If conditions are right I will lease/option to buy or sub to to buy…but most my deals are cash deals. I try and buy at 80% or better than appraisal-then lease/option to my tenant buyers for a small upfront option fee and maybe 3-5% above appraisal value. Since I own the property The rent less the taxes is my cash flow.
Hope that helps
KEC
You a pretty smart cat ! Thanks for the advice… Now when u say sub to’s , i really not familar with this method… I went to the registry of deeds and looks like the property appraisal is like 206,000 and the assesment is listed at like 144,000 . I dont know how much her current tenants are paying for rent in this duplex or if the have a lease or rental agreement. I would have to offer the right price in order to make out after PMTI. If you could elaborate @ the sub to’s so i could better understand this method. Thanks again…
it is not this simple but the idea of it is to get her to sign over the deed and you agree to take over her current motgage payments