I was talking to another investor in the area about some different strategies, and selling by rent2own came up.
He told me that he knows of other investors who say that rent 2 own would be great but they can’t ever get anyone with an upfront option consideration. I guess he’s saying they rarely ever have cash to put up front.
I’m sure that there’s just some negativity around with the current market, but is this pretty common to get loads and loads of prospective TB’s that don’t have any cash to put up? And if so, what do you suggest…sort through till you find someone who does, or boost the amount of rent by several hundred dollars?
Yes, this is very common if you promote your RTOs as glorified rentals to tenants. Why would people with a ‘tenant menality’ want to put thousands of dollars down and pay more than market rent?
However, if you promote your RTOs as an alternative to bank financing until they’re able to get a mortgage and you ensure that they have a ‘buyer mentality’ then you will get prospects who will beg, borrow and steal to get the money.
Of course I do get calls from people who are in dreamland but I just blow them off because I never fail to find a great family who’s just dying for the opportunity to buy their own them the easy way!
The best way is not to advertise in the rental section - like some advise - but actually advertise/market in the buyer’s section. Don’t to “Rent 2 Own.” Do “Lease to Purchase” or "Lease Option.
Advertise in the House 4 Sale Section with an ad something like this:
Owner Financing - 3 bdrm - 2 Bath in good neighborhood. Good Job - Bad credit, OKAY! Call 555-1212.
You’ll get a ton of calls of people who want to buy a house. Explain the program. if you have a property that fits their ability to pay - then great! Put them in it! if not, that’s okay. Keep their names - tell them you have nothing now but something should come up soon. Then you go looking for another property that fits their profile.
Do it this way, and you can sandwhich LTO in a day, because you have a T/B waiting.
The specific terminology to use in your ads is location-dependant. In some areas “owner financing” will work like Salverston said. In other places “lease with option” works. In my area the general public is unfamiliar with both of those terms so I use “rent to own”. You just have to test them out and see what works for your market. If you get a lot of people saying: “Huh?” and then after you explain it they say: “Oh you mean like a…” then they’re telling you the phrase you should be using.
Incidently, this applies to sellers too if you’re looking for sandwich L/Os. You wouldn’t believe how long I kept using terms like “lease purchase” and “installment sale” thinking it was more appealing to sellers. I ignored the advice I just gave you and kept shrugging off the comments from sellers: “OH you mean like a ‘rent to own’!” LOL I eventually learned my lesson though.
As for where to advertise I will do both the for sale and for rent sections. The key to weeding out a lot of the tenants from the rental section is to mention in the ad how much you want down and how much per month. Also it is absolutely critical to have a voicemail or website set up to direct prospects to. You’ll wear yourself out describing the house and the terms to people who have no chance to qualify. Let them pre-screen themselves by stating the terms in your voicemail or web page and then telling the to call you if they’re sure they can afford it.
Signs are also a great way to attract interest. A sign in the yard and directionals are often all it takes to L/O a house.
You could also try and find local landlords to refer your “renter” leads to. Maybe for a small finders fee if they do rent to them. Or just get some less than perfect houses to keep as full rentals and place your “renter” leads into them.
You could even rent to them with an additional amount each month that goes into their “down payment” account. Once they pay you your down payment then transfer them into one of your L/O houses.
RASBMA - Ranger Airborne Sir Bite MY ASS - had to google that one
FIGMO - ?? Got me there
DILLIGAF - Does It Look Like I Give A Fck
SNAFU - Situation Normal - All Fcked Up
I eventually learned my lesson though.