One of my exit strategies with a property of mine is to sell it as a rent-to-own. If I don’t sell it outright, and I sell it on a L/O then how does the realtor get compensated?
Nate-WI
One of my exit strategies with a property of mine is to sell it as a rent-to-own. If I don’t sell it outright, and I sell it on a L/O then how does the realtor get compensated?
Nate-WI
Realtor??
What Realtor??
You found the tenant. Once they get their credit straightened out. You take them to the Title Co.
Nothing against Realtors. It is just that doing it this way. you do not need one.
Bruce
I’m going to be listing this with a realtor when its completed. Its a rehab. My options will be owner financing, taking back a second, L/O, and lastly to rent it. How does a realtor get compensated if there is no full purchase?
Nate-WI
Nate,
There are many different ways that a realtor can get compensated…
-If you sell it outright they would of course get their commission split
-With a lease option you could split your option fee with the realtors
-Set a flat fee for the transaction (offer to give the realtor a set amount to get it listed)
-There are many different options…the most important question though is what will your realtor require? You should talk about this ahead of time…he may not want to do it, but others out there will.
-Don’t rule out using a realtor, it can be a great way to get your property maximum exposure, it just depends on what the market is like. What part of WI. are you from??
Nate,
Why do you want to give 6% to a realtor? It’s very easy to sell it yourself and pocket the money and you have other options that you have not even considered. Take your time and good luck to you.
The realtor that I’m using is the one who brought me the deal. He got paid since it was bank owned. In return I want to give him my business so we can build a good working relationship. Also we talked briefly about fees and he said he would be charging me 2.5% for his fee. Remember he got paid on the sale as well so he is making money.
JBG…I’m located in Appleton which is about 25 minutes South of Green Bay. Grew up in Madtown and now been up here in the Fox Cities for 5 years. Been doing lonnie deals for about 8 months and now gonna get after my first rehab. And you?
Nate-WI
Nate,
I’m originally from Eau Claire, but now live in Atlanta.
I hear what your saying about trying to keep your agent in the loop for the resell, since he brought you the deal, but your profit margin is what has to drive your decision. I’m also a realtor and for a while I had a couple of investors that would always buy from me, but I couldn’t afford to list their property and still allow enough of a margin for them to make any real profits…so they would list it fsbo or with a discount broker, but they would always come back to me to buy their next investment property-so keep in mind that even if you don’t list with your agent but come back to him on your next deal I’m sure he’ll understand-(unless you’ve already signed a listing contract).
Offer him a low fixed flat fee or you could split part of the down payment between the two brokers-I’ve seen this done many times in Atlanta, then if it ever does close they get their commissions at that time…why don’t you just flip it? Why do you want to l/o or lease purchase? I know that Green Bay is a booming market, but I’m unsure of Appleton.
2.5% is still a little high for an investment property (unless your talking about 2.5 for both sides-then this is an excellent rate!!) If an investor buys from me then I get him out of the property for my costs+300. I figure if they are happy and are making money then they’ll continue to come back for more properties-and they do. I would discuss this with him, remember if you do many deals a year, then this will more than make up for the low commissions you would be paying him and he could still get full commissions when you buy.
Don’t count the realtors out, they can find you some great deals, motivated sellers/buyers, and offer a lot of tips and information. It all depends on your investment strategy, profit margins and time you have to put into your business. And if you don’t want to use one (or can’t afford to) then don’t-but whatever you do don’t rule them out, they can really help!
Eau Claire, hey? Nice town. Big college town but I like the feel of it. Thanks for the tips. Rent to own will be one of my exit strategies along with owner financing, taking back a seller second, and lastly doing this as a rental. I absolutely want to flip it but I need to be flexible. The 2.5% would be if I were to flip it. So he would get the 2.5% at closing off of the purchase price.
He has a couple more deals that he is working on but he wants me to get this deal done with the bank and work being done to it before we move onto the next one. Again just a feeling out process with him and myself which I can respect. I wasn’t sure about GB’s market. Appleton’s is there for the picking but has some good competition with investors and wannabee investors. I bought this property which is about 45 minutes from Appleton. It had been on the market for 6 months and had no offers on it. They wanted 55,900 back in August and then the lender kept lowering his price. This realtor kept an eye on it for this time and then we got hooked up. He told me about the property and some others. I didn’t like the others that we looked at but this one I liked. Long story short we got it for 40K with them kicking in 1500 bucks for closing costs. We close on Wed. and I will be there on Sat. with some friends to do some demo work and prep work for the contractors. I’m a little nervous about it but I think that’s normal for my first one. The lonnie deals have been great and I will keep doing those for the cash flows.
Nate-WI
Nate, yeah UWEC is great!! Had many a great time there.
Be sure to find out what the selling side of the commission will be (you stated HE is charging you 2.5 for listing it, what are you guys going to pay the buying side?) In Wisconsin you do have a sellers market, whereas the listing side and charge a little more commission vs the buying side. I would still see if he would list it for 1.5 to 2% on his side and 2-2.5% on the buying side (or to really get the other realtors to look at it offer 2.5-3.5% for the buying). Like I said never rule out a realtor, but always let your profit margins guide the way to get out of the property…good luck!!!
BTW are you subbing all of your work out or doing it yourself?
Thanks again for the tips. I’m going to do a little bit myself. I’m going to have contractors for the roof, drywalling, paint, and cabinet refacing and carpet. A very good friend of mine is exceptionally handy and is going to install (along with my help, god help him) the plumbing, trim, kitchen counter tops, 2 outside doors and the little things as well. I bought it for 40K and I really only hope to put 15K into it. I’m getting quotes for the roof in the 5-6K range. Most of the drywall in this place is already hung and taped. I’m getting quotes in the 2.5K range. Carpet is in the 3.5K range. The trim will be costly if my buddy doesn’t help me with it. Once step at a time so we will see how it goes. I’m gonna post my happenings on this site as I progress so we can all learn the good and the bad. Stay tuned!
Nate-WI