Hopefully this could work for you. This is the strategy that we are currently using to sell REO properties we buy. Currently we buy about 50 a month.
First, find out what the average rental amount in the area for your type of property. Check Rentometer.com, call a Realtor, etc…
Once you know the avg. rental amount, you then subtract what it cost for taxes and insurance on a monthly basis. Let’s say you find out that your property will rent for $650 in good condition. Let’s further say monthly taxes and insurance is $150. So, $650-$150= $500. Now because of its current condition, let’s offer another 20% discount so this brings us down to $400.
You then put up sign on the house “FOR SALE! Owner Financing…$800 down $400 a month”. You then reverse engineer the numbers to get to the selling price. You will create a note on a 15 year term, 10% interest. If the payment is $400, interest is 10%, Number of payments is 180 months, this will give you a present value of $37,223. You’re selling the house for that amount.
You will create a promissory note in the amount of $37,223. You will sell the house on a Land Contract which means you control the deed. The deed only transfers once you receive your full payment of $37k. If there is a default, you will simply go through an ejectment proceeding similar to that of an eviction but faster than foreclosure. Selling it this way, you simply become the bank and not a landlord.
You do not need to fix the house. Explain to your buyers in exchange for 100% owner financing, they will be responsible for fixing up the house, paying taxes, insurance and utilities.
The reason people will be interested in this is because you are pricing the house lower than market rents. In essence, making it cheaper to own than to rent. This will attract people that want to buy but does not qualify for a traditional/FHA mortgage due to credit score.
When we evaluate buyers we tell them, credit score is not important but we do look at credit habits. As long as they have not been evicted 2-3 times and no judgments, we will consider them. Old medical bills, credit card collections on their credit report is not a problem. What is important is they have verifiable income. We look for an income of at least 4 times our monthly payment. If its $400 payment, we look for someone with at least $1600 a month in income.
Here is an example of one of our properties that we advertised on craigslist and is in the process of closing:
Using this strategy, we sell our houses on average 2-4 weeks. We’ve sold properties without a furnace, pipes missing, in rough neighborhoods, etc…There are people out there that are willing to buy homes even if it needs work especially if someone is willing to finance them.
Hope this helps.