I live in a market that had rapid appriciation durring the boom. Currently there are investors renting out properties that they can’t sell because of the slow down and the saturation of the market with new homes. I will use some numbers from my market. The investors have a debt service of $3000.00/Month but are renting for $2000.00/Month just to get someone in the place(due to the saturation. Renters Market). A majority of the “boom” investors are upside down in thier rentals. Is there a strategy to use in this type of market for lease options. It would seem to be a hard sell to get a seller to let you option thier house and give them less than their mortgage payments because I can’t get a tenant to pay enough to make the house breakeven or cashflow both for me and the seller. I know there is a way to make this work in any market but I don’t have the experiance in this type of market. Thank You in advance for your suggestions.
I think you would have to find people who financed before the boom
Unfortunately for investors and home owners that bought at market value with 80/20 loan are now paying the price. I get alot of people that contact me with this situation. The only thing I can offer is a lease option and they have to pick up the negative. For example: They are paying $2500 a month, house is vacant, and rentals in that area for the same type of property is $2000 a month. They have to be willing to pay the $500. Just because it’s a lease option most people will not pay above market rent. You just have to educate the homeowner/investor. They could continue to pay $2500 a month for 3,6,12 months or $500 until the property sells.