My goal is to get a property under contract from a seller with a nice profit spread and quickly re-sell to a retail buyer that may have problem credit at or near FMV getting them 100% financing through a sub-prime lender. I want to cash out the seller and take my profit, preferably within 30 days.
So far my properties under contract are not local, but out-of-state, since it has been difficult to get these type deals in my area.
I’ve gotten a couple responses from placing rent to own ads. Although I advertised for RTO, could I just switch gears and tell them the advantages of buying with “100% financing, zero down, lower monthly payment and lower price” versus buying through the RTO program with higher selling price and monthly payments with no depreciation?
I’ve also heard that one could sell to a credit partner for a small profit to get some cash now, and then partner with the credit partner to lease option to a T/B while sharing the profits with your credit partner. Any thoughts of this method?
Any advise on this type of REI strategy and what are the best ways to find motivated sellers and retail buyers? I haven’t had much luck with Craigslist in finding buyers.
You don’t have to whack buyers over the head with a bait-and-switch tactic like that. You can make it much more seamless. You can easily convince most T/Bs to buy outright, most of them think they can’t qualify, that’s why they’re calling your RTO ads.
When they call just run their credit and if they qualify for a sub-prime loan then call them back with the GOOD NEWS!
“Yes you qualify to buy this house, in fact we can get you a mortgage right now and your payments will be $100/month less!”
BTW if you can find sellers willing to take a significant discount, then you can find sellers willing to RTO the house too. One is usually no easier than the other. You seem to be approaching the business on the premise that it’s hard to find sellers willing to RTO their homes. That’s true, but it’s not any easier to find sellers willing to take far less than their house is worth.
Thanks for the very good advice. I also was wondering, since this market now seems to be slow in moving properties to retail buyers, would it be feasible to market to these RTO buyers. The ones that do do qualify for a sub-prime mortgage can be setup in 6-12 month credit repair program to then be able to qualify for a morgtage to purchase the property that they are now renting to own.
How would one convince a seller to let the T/B RTO the house while the T/B goes thru a credit repair program to then be able to qualify for a mortage and purchase the house and cash out the Seller?