Take Timely Action to Find Lease Options (Beginning the Lease Option Cycle)

As soon as you have my free scripts and look over the basic courses, you are ready to take the action needed to find lease options. As we already know, COVID-19 has turned the real estate market on its head. Mortgage and rent payments are being missed as each month passes. This is a huge motivator for landlords to get out of the business and homeowners to get out of a house going underwater fast.

This developing market has the makings to perfectly coincide with the steps you take to get in as a sandwich lease option investor. The first step that students are already taking is connecting with these motivated sellers.

This is a Wild & Crazy Time for Lease Options

Sandwich lease option investing is so flexible that you can get into it either backward or forward. That means you can either find the tenant/buyer first and then find the house (the backward route) or you can first find the house and then find the tenant/buyer (the forward route). The forward method is definitely preferred because it is much easier finding a tenant/buyer to match a house you already have under contract than looking for a specific house to match a specific buyer. The first step to find lease options is so easy that a 14 year has done it (I share the story with you shortly).

The reason I’m so excited for students is that these times are perfect for entering the market.

Tips to Get You Started

My many blogs and videos share the ways you can find lease options and here I’m sharing a few of my trade secrets about how to use Craigslist and local newspapers. The first thing you look for are likely candidates in the “For Rent” and “For Sale” sections of these publications. Local newspapers include small cities and towns as well as specialty papers like “Pennysaver” and “Shopper.” These are still widely read, especially by the demographics of people that you are most interested in contacting. Big city newspapers can work but these are more of a second choice rather than a first choice.

Something you want to know about Craigslist is that they make regular changes to how the software works. For instance, you need to know that if you cut and paste the same reply to multiple advertisements, the software will stop forwarding your replies to the people that placed the different ads. The way you make this work for you is by creating 3 or 4 slightly different versions of your reply and then cut and paste different versions over 7 or 10 different ads. You can usually continue rotating the different versions many times. That’s for ads that you are replying to.

For ads that you are running (both Craigslist and local newspapers), you want the ad to appear professional when trying to find lease options. This is as simple as using a business name instead of just asking people to call “Fred” (you) at a telephone number. You can even include a department name such as the “acquisitions department.” Of course, this works best if you answer the phone number using the business name. Something else to consider is that Craigslist is free to place your advertisements. Pennysaver, Shopper, and local papers do work but also cost a little money to run your ads. If you are just getting started, you probably want to focus mostly on Craigslist.

What you are offering landlords and sellers is a unique way to sell their home.

If a 14-Year-Old Can Do This, So Can You

This is a true story about a 14-year-old boy and his father who attended a seminar I spoke at in Houston several years ago. John (the 14-year-old) took careful notes during my demonstration about making live calls to find lease options. This is where I share how to gather information to determine if the person is open to the possibility of doing a lease option.

The next day, 14-year-old John highlighted a few ads while at school and started making calls that afternoon. He had no training other than what he had heard in the seminar the day before. In a short time, he had a seller lead for a lease option who said “yes” they’d like to consider it. But then reality took over because being only 14 and having no experience, he couldn’t and didn’t know how to enter into a legal contract. He went to his father and said, “What do I do?”

John ended up selling the lead to another investor in their local investment group for $500. He gave me a copy of his $500 check. Not bad for a 14-year-old kid and one to two hours of work. John immediately went on to develop a relationship with a local investor. On his next deal (while still 14!), he made 50 percent = $14,000 – of profit for his assistance in the deal. He has since done additional deals for much higher profits.

How and why can a 14-year-old kid do this and yet most adults would not? Is it fear of the seller saying no? Is it fear of the seller saying yes? Either way, it is FEAR! We are afraid of failure. I believe we all have a fear of failure and/or a fear of success. At 14, John was not afraid of failure. Heck, he probably hadn’t even been dumped by a girl yet! He just applied what he learned and tried it. When you know what to say and when to say it, it makes it so much easier.

You are never too old or too young to start investing with sandwich lease options. If you can do the research and pick up the phone to make the calls, you are on your way.

Many of us stop before we even get started because of fear. We let fear get in our way of success.

Details to Practice When Talking to Potential Sellers

You’ll develop your own style of what works best for you as you gain experience. But to get started, here are some tested and proven basics that you should always be using.

Use a kind and friendly voice. Raising your voice an octave or two helps. Men with gruff voices might want to consider having a wife or girlfriend make the initial phone calls.

Keep your sense of humor and keep this fun. Some calls can be quite funny.

As part of the qualification, ask if the seller will allow pets because many tenant/buyers want to have pets. It will affect your rent and selling prices.

Try different rental price ranges. If you are getting all “Nos” about rent to own in the $900 rent price range, move up to $1,000 or $1,200. You are looking for people desperate to cover their mortgage payment and maybe make a few extra bucks. You are not looking for long term landlords who have a paid-off mortgage or very low mortgage.

If you are a real estate agent, you must state that in your phone calls and any advertising that you place. Investors also need precise wording when talking with agents. The wording needs to deal with both option fees and commissions. Agents can be paid on both ends of the deal.

Consider contacting property managers. They can usually make a full commission on the sale and be the property manager in the middle of the deal during the lease period.

Be skeptical of ads offering “rent to own.” These might be decent option lease investments but seldom are. The person usually has the front end of a lease option in place and is looking for a tenant/buyer.

Keep a tickler file for callbacks. Especially if the person shows an interest in a lease option in the future.

If you are in a situation of fear or uncertainty, you overcome it by taking action.

The world is changing for everyone. You want to be part of the win-win-win solution by taking action to find lease options. Right here is where you begin taking that action:

  1. Cooperative Lease Options.
  2. You progress to Investing In Real Estate With Lease Options.
  3. Next are advanced strategies for Buying and Selling with Lease Options.
  4. Move up with your Wealth Building Arsenal.
  5. Add Personalized Coaching.
  6. Expand to Get the Deed “Subject To.”
  7. Round it all out by Working with Realtors.

By Wendy Patton

For more than 30 years, I’ve used the Sandwich Lease Option System to earn myself and my students millions of dollars. From my experience, I know there is plenty of room and opportunity in the real estate investment market for everyone wanting to participate to find profitable deals. It’s because of that fact and my personal success that I share the Sandwich Lease Option System with others.

If you found this information useful, please visit again soon at wendypatton.com.

For more exclusive content, please subscribe to my RSS Feed and YouTube Channel.

What did you think of this article? Please leave a comment below.

 

How to Find Rent to Own Properties With Deals You Never Thought Would be Accepted

I hope you’re in the mood for some number crunching. You need to be because that is how you find hidden profits in deals that other investors walk away from. After all, how to find rent to own properties is all about crunching the numbers.

You do NOT have to offer what the seller is asking for the house or even what they still owe on the house. You might not even have to pay them a monthly rent amount equal to what they owe on their mortgage. These deals aren’t the most common. These types of deals are not often recommended for beginning sandwich lease option investors but are some of the more advanced deals that I and other investors have been doing for many years.

A great thing about lease options is that even advanced deals are low risk when you don’t take ownership of the property!

Although I do try to keep lease option deals above water, there are win-win-win deals out there that look like sure losers if you aren’t flexible and creative on the terms that can be offered.

What you have to do is help the seller out of a difficult situation. How to find rent to own properties is very often about helping the seller with debt relief. But that might only be partial debt relief coming at the right time. If the seller won’t make any money on the deal, the debt relief you offer has to be substantial. That is possible, which is why you always invite potential sellers to call back again if they can’t find a better way to solve their problems.

When you are their best solution, they are thankful that you are still available to help them out!

Let’s look at a few of these more advanced sandwich lease options that show you how to find rent to own properties at any time and any where…

Example #1. This is a 5 bedroom house with 4 baths on a little over an acre of land. The after repaired value (ARV) of the home was about $185,000 in a rural area of Michigan. The owner still owed $183,000 on the mortgage, which meant there was not enough equity to pay an agent commission for a sale. Their monthly mortgage payment was about $1,635. With the very small spread of $2,000 between the ARV and balanced owed, another investor would assume the risk is too high and that no profit could be made.

But with a sandwich lease option, you can offer to pay off the mortgage when the deal closes in a couple of years while writing a contract with a sales price at about $171,000 so that you collect anything above the outstanding mortgage. You’ll also offer only $1,300 for the rent although the seller currently owes $1,635 monthly towards the mortgage. You do this so that you can earn something on the rent spread with the tenant/buyer until the final sale happens. But before you make that $1,300 rent offer, you need to crunch the numbers and know the seller can refinance the existing mortgage at a lower interest rate to lower the seller’s monthly payment to about $1,300. The seller sees this as a win because of the monthly debt relief.

Your deal with the tenant/buyer is a sales price of $192,500 with a monthly rent of $1,450. That gives you a $250 monthly rent spread. You also collect a $7,500 option fee. Everyone comes out a winner in the end and you’ve added a total of about $23,000 to your bank account.

Example #2. Flexibility and creativity enable you to get into a deal without risking any of your own money. This house had an ARV of $161,000 and the investor agreed to that as the sales price. The seller also wanted $2,500 as an option fee. In exchange for the full ARV price, the seller agreed to allow the investor to first find a tenant/buyer before making the option payment. The tenant/buyer’s option payment was $10,000 that put $7,500 in the investor’s bank account after making the option payment to the seller. That is no cost and no risk upfront but still comes with a handsome front-end payment. This was also a call back a year after the investor and seller originally had a conversation about sandwich lease options. By the end of the deal, the investor made $39,000 on the deal, which is a good in the Michigan market where median home sale values hover around $150,000. These deals will be worth considerably more to you if you are in a market where prices are closer to $250,000 or $300,000.

Your Deals May Be Worth Much More In Your Local Market!

Example #3. This is a 5 bedroom, 2 bath, 1,800 square foot home on a 20 acre ranch. Large rural properties can be difficult to sell. This one had an ARV of $230,000 that is well above the median home sale in Michigan. The seller had not been able to sell the property after three years on the market. When they decided to use a sandwich lease option, their only requirement was coming away from the closing table with $80,000. The remaining mortgage was $130,000, which meant there was $100,000 equity available towards the $80,000 and to put a deal together.

The investor agreed to pay a monthly rent of $1,035 that would cover the seller’s full mortgage payment. However, the investor received a monthly rent credit of $100 that applied towards the purchase price at closing. The rent credit enabled the seller to fully cover the mortgage payment but the investor gained equity in the property at closing (nothing came out of the seller’s pocket). The investor sold the property to a tenant/buyer for $250,000 with a $1,600 rent. The tenant/buyer did not receive a rent credit so the investor earned a monthly rent spread of $565 plus the $100 in equity gain.

This is known as a “Mortgage Pay Down.”

The longer this sandwich lease option deal goes on, the more money the investor makes. And there is another chunk of money in this deal for the investor. The mortgage is paid down each month of the deal. At closing, less money goes to the mortgage company and the seller is locked in at $80,000. The money paying down the mortgage each month also goes to the investor at closing.

Investors need to understand the Dodd-Frank Act for advanced deals.

Something you should know is that the Dodd-Frank Act (passed in 2010) has an impact on rent credits. This legislation is about consumer protection. It mostly assumes that investors are more sophisticated when it comes to real estate deals and that tenant/buyers are less sophisticated. Because of this, rent credits are generally no longer available to tenant/buyers because of the possibility rent credits will be interpreted as acquiring equity starting at day one. However, the equity does not apply until the deal is completed and is forfeited if the deal is not completed. Under the Dodd-Frank Act, a court might award a tenant/buyer equity in the property even if the deal is not completed. The good news is that rent credits are still available in the contract between the seller and the investor.

The big take away from these examples about how to find rent to own properties is that creativity is the backbone of sandwich lease options. That creativity takes place in the Terms of the Contracts.

Take action by learning other creative ways of putting these highly profitable deals together using all of the tools available including Cooperative Lease Options and Get the Deed “Subject To.”

  1. Investing In Real Estate with Lease Options.
  2. Advanced strategies for Buying and Selling with Lease Options.
  3. Your Wealth Building Arsenal.
  4. Add Personalized Coaching.
  5. Cooperative Lease Options.
  6. Expand to Get the Deed “Subject To.”
  7. Round it all out by Working with Realtors.

By Wendy Patton

For more than 30 years, I’ve used the Sandwich Lease Option System to earn myself and my students millions of dollars. From my experience, I know there is plenty of room and opportunity in the real estate investment market for everyone wanting to participate to find profitable deals. It’s because of that fact and my personal success that I share the Sandwich Lease Option System with others.

If you found this information useful, please visit again soon at wendypatton.com.

For more exclusive content, please subscribe to my RSS Feed and YouTube Channel.

What did you think of this article? Please leave a comment below.

Sweet Spot Averages – Buying Real Estate with Lease Options (Know Your Market)

Knowing something and doing something are very different activities. Knowing it is time to get in on this new market is one thing, but taking action now is what you need to be doing. As soon as you have the criteria for the sweet spot in your market, you are ready to take the action of putting deals together.

How to Begin Buying Real Estate with Lease Options

There’s nothing difficult or tricky about buying real estate with lease options. The first step is literally about getting to know your town a little more with a real estate perspective. Before making phone calls or sending direct mail to prospective sellers for lease options, you need to fine tune your target audience. This seriously improves your chances of finding the deals that will work best for you. How difficult is it getting started? It’s as simple and easy as:

  • Targeting desirable zip codes.
  • Looking up the median sales prices in the zip code.
  • Understanding sales activity across both your targeted and closely related zip codes.
  • Fine tuning the targeting to specific houses that are selling well.

With this knowledge in mind, your first deal is only a phone call away. With those pre-screening tools and the right telephone script, you’re statistically almost certain to get one or more deals within 50 or fewer calls. And there’s no reason you can’t have a five-figure deal within the first five calls. Practice, practice, practice is what counts early on when buying real estate with lease options. Targeting, practicing, and fine tuning your script is how you make your early calls count the most.

Get Experience Under Your Belt and Cash in Your Bank Account!

Making Your First (and every) Call

As soon as you begin making targeted calls, you need to learn details about the potential properties. Quickly qualifying lease option properties enables you to focus on the properties most likely to become fruitful deals while keeping phone calls short if the seller isn’t motivated. The information you begin gathering is:

  • How much equity does the seller have in the property?
  • Are repairs needed and how serious are any needed repairs (time, money, and risk)?
  • What is the seller’s motivation to sell? And how much equity are they willing to make available to close the deal?
  • When does the seller need cash and how much do they want?

There is No Deal Until the Prospect Passes Through These Gates.

You do not want to lease option a property that requires you to invest money in the home. At least not when you are beginning. It’s fine to do some painting and shampoo the carpets but no central heating replacement, no new roofs, and no foundation repairs. Not even if you think the return on your investment will be substantial. Major repairs involve your time, money, and increase your risk. Buying real estate with lease options is about minimizing risk and costing little or no money. For your first few deals, you will do best by sticking with pretty houses with white picket fences.

*Caveat, you may be able to market a handyman special to another investor using the Cooperative Lease Option method.

You might score 2 deals out of the first 5 calls or finding 2 deals might take 50 calls. No one knows for sure until you try. Some sellers will quickly accept what you offer and others will not (but they might call back later). What you do know is that the more deals that you offer, the more deals you will close.

How You Recognize the Right Deal for Buying Real Estate with Lease Options

What you now know is that if properties in the zip code have median values of $110,000 you don’t want to make a deal for a purchase price at $200,000 for a house that could be worth $275,000 after you make $50,000 in repairs. Too much risk and too much of your money will be in the deal.

Instead, you want to create steady cash flow with three or four properties priced close to the median price for the neighborhood. You can typically seal these deals in the same amount of time but at lower risk and for higher earnings.

Your Financial Criteria is 15% or $20,000.

You may want to adjust to your local situation but the general rule of thumb when buying real estate with lease options is it has a resale value near the neighborhood median price and your earnings will be close to 15% of the resale value or $20,000. This includes all three income streams – 1. the option fee, 2. the monthly rent spread, and 3. the back end.

A common Michigan deal would be a median neighborhood sales price of $80,000. Your front-end option fee is $4,500. Another $4,500 comes from the rent spread over 24 months. And the final $10,000 comes on the back-end when the tenant/buyer completes the purchase.

Those numbers total $19,000. Fifteen percent of the $80,000 value is $12,000, which means $19,000 is well above the 15% threshold. It is also only $1,000 shy of the $20,000 criteria making it a solidly representative deal when buying real estate with lease options.

If the median sales price is closer to $400,000 in your neighborhood, your numbers will be different – and much higher.

It All Begins When You Make the First Call!

Lease options are proven to work in every market and the COVID-19 market continues proving how truly robust this method is. Here is the step-by-step way to making it happen by taking action now!

  1. Investing In Real Estate with Lease Options.
  2. Advanced strategies for Buying and Selling with Lease Options.
  3. Your Wealth Building Arsenal.
  4. Add Personalized Coaching.
  5. Cooperative Lease Options.
  6. Expand to Get the Deed “Subject To.”
  7. Round it all out by Working with Realtors.

By Wendy Patton

For more than 30 years, I’ve used the Sandwich Lease Option System to earn myself and my students millions of dollars. From my experience, I know there is plenty of room and opportunity in the real estate investment market for everyone wanting to participate to find profitable deals. It’s because of that fact and my personal success that I share the Sandwich Lease Option System with others.

If you found this information useful, please visit again soon at wendypatton.com.

For more exclusive content, please subscribe to my RSS Feed and YouTube Channel.

What did you think of this article? Please leave a comment below.

Get Past Your Fears by Investing in Rent to Own Properties (How to Begin Your COVID-19 Economic Recovery)

Most tenants considering rent to own properties don’t think they can qualify for a mortgage. The fact is that many can’t right at this moment. But that doesn’t mean buyers shouldn’t be preparing for the future when they will qualify to buy. Also, there are sellers out there that need to sell today but the new economy and social conditions have them postponing the sale into the future (even if they need cash today).

Sandwich Lease Options Fix All of this Today!

Not being able to qualify for a mortgage today or not being ready to sell today doesn’t mean you can’t help both of them lock some certainty into their future. Confidence in what the future will bring is why rent to own properties have worked in the past, why they work today, and why they will work tomorrow.

Posturing Yourself to Market Rent to Own Properties

Rent to own properties offer the most flexible real estate contracts available in any market. Your point of entry into the business starts by finding motivated sellers. The good news is that motivated sellers need you. That doesn’t mean that everyone wanting to sell their house is motivated but when you do your marketing correctly, you will find motivated sellers that need what you are offering.

90 Conversations in 90 Days

Start your first marketing campaign with one thing in mind – Practice, Practice, Practice. Don’t worry about closing a deal with the first few people that you talk to. First, you want to become comfortable talking to prospective sellers about what you can do for them. That’s why you want to call at least 90 people in 90 days to have the conversation. More calls are even better. Having a marketing campaign that gets them to call you is best. Leaving messages doesn’t count because you are not practicing having a conversation with the person.

You practice and fine-tune the script that gets them talking. You don’t over commit in the first conversation you have with a seller and you don’t over promise. You are collecting information first so that you can have a more personalized conversation that fits the needs that are motivating them.

Part of your early conversation uses a script that goes something like “If your house qualifies, I can make an offer quickly.” Then you let them tell you why they need to sell. At this point, you probably haven’t even mentioned that your offer features rent to own properties.

Treat This as a Professional Business

Rent to Own Properties Require a Professional Plan

Don’t try to motivate an unmotivated seller. If they aren’t ready to sell, politely get off the telephone while mentally saying to yourself “next.” Don’t be surprised when you don’t have a seller after the first 10 calls. That’s why you are practicing. Deals start happening around 20 or maybe 30 calls. Anything before that is pure gold. Still, those first 10 callers might call back in a few weeks. Never burn your bridges.

People will start calling you to ask what you can do for them. Maybe they call back on a message you left for them or maybe it comes from marketing materials you sent out. When you are running a marketing campaign, 90% of the calls will come within the first week.

Keep Your Marketing Personal

Have a plan to answer calls professionally and personally. Having a real person answer the call is much more professional and more likely to move deals forward for rent to own properties than having the call go to a message service. When calls do go to a message service, keep the message simple. Let the caller know they reached the correct business and very briefly confirm the marketing materials from your campaign. The only other thing you need is to ask them to leave their name and contact information so that you can call back to have that personal conversation.

While having that personal conversation is the time to begin drilling down into the details about how you can help their circumstances. Don’t start by talking about rent to own properties. First, you want to know about the property they are interested in selling. You want to qualify that they are a motivated seller with a property that you can work with. Ask leading questions and let them talk. When they ask a question, be sure they understand the answer you give them. Your answers should address the issues that are motivating them to sell.

Very quickly, you will know if you have a potential deal or if it’s time to move on to the next motivated seller. They are out there and you will find multiple deals in less than 90 days. You can expect to have your first deal in 29 days or less.

Don’t focus on only one lead. Remember the first 90 days are about practice, practice, practice. When you have the right motivated seller, the numbers will come together.

Spend a $1 to Earn $25,000

There are dozens of ways to run a successful marketing campaign to find motivated sellers. A direct mailing campaign typically costs $1 or less per mailing and bandit signs also cost about $1 apiece. The return on your $1 investment can be phenomenal – often $25K to $30K. That’s because rent to own properties have three profit points. Those profit points are:

  1. You make money from the lease option.
  2. You make money on the monthly rent.
  3. You make money when the house sells.

This is what a $125,000 sandwich lease between Sam the Seller and Bill the Buyer can look like:

  1. Your first profit point is the $2,000 difference between the $1,000 option you pay Sam compared to the $3,000 you collect from Bill.
  2. Your second profit point continues every month for the next 18 months when you collect $225 more in rent each month (total = $4,050).
  3. Your third profit point comes when Bill completes the purchase for $18,950 more than you owe Sam.

Your total earning are: $25,000 ($2,000 + $4,050 + $18,950).

TIP: Don’t agree to make payments to the seller before you have collected a payment from the tenant/buyer.

More detailed answers to your questions are in these courses. As soon as you TAKE ACTION, you will have success!

  1. Investing In Real Estate With Lease Options.
  2. Advanced strategies for Buying and Selling with Lease Options.
  3. Your Wealth Building Arsenal.
  4. Add Personalized Coaching.
  5. Cooperative Lease Options.
  6. Expand to Get the Deed “Subject To.”
  7. Round it all out by Working with Realtors.

By Wendy Patton

For more than 30 years, I’ve used the Sandwich Lease Option System to earn myself and my students millions of dollars. From my experience, I know there is plenty of room and opportunity in the real estate investment market for everyone wanting to participate to find profitable deals. It’s because of that fact and my personal success that I share the Sandwich Lease Option System with others.

If you found this information useful, please visit again soon at wendypatton.com.

For more exclusive content, please subscribe to my RSS Feed and YouTube Channel.

What did you think of this article? Please leave a comment below.

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