The basics are that once a seller is found, the investor looks at the seller’s equity in the house, their mortgage payment, and makes sure there are no other liens on the property. As long as the payment allows the house to be rented for more than the payment, enough for a nice monthly cash flow, then an offer can be made to the seller. But first…
“Hi, I hear your house is for sale. Can you tell me about it?” (Pause)
Starting Your First Sandwich Lease Option Deal
“I’m an investor who is interested in quality houses in nice neighborhoods can you tell me if this house is in a nice neighborhood?” …..
The pregnant pause is a powerful tool to get the seller to tell you how a sandwich lease option can get them out of a difficult situation…
“That sounds like a great house. Why would you ever sell it?” (personal problems, moving, divorce, yadda-yadda)
Listen, listen, listen to what the potential seller is telling you so that you learn what a sandwich lease option can do for them. If there is nothing in it for the seller, there will not be a deal for you. It’s that simple when getting started.
By this time, you should know enough about the seller to know whether to pop the question…
“I have many ways of purchasing your house; one way is to lease your property for a few years then cash you out, is that something you want to discuss?”
What You Have to Offer to Sellers
Retail buyers complicate the seller’s life with a long-drawn-out process that starts with negotiating, moves on to inspections, followed by more negotiating (and possibly expensive repairs), followed by a long mortgage approval process that requires an appraisal, and sometimes even more negotiations. During this long grueling process, there is no guarantee for the seller that the sale will ever get to the closing table.
Through flexibility and creativity, you (as an investor) can put cash in the seller’s pocket as soon as tomorrow afternoon or next week. You can work with the sellers’ realtor or you can work directly with the seller. With a sandwich lease option, you can guarantee to make the seller’s mortgage payment that’s due next week.
Sandwich lease option investors are problem solvers!
There are always motivated sellers in the marketplace. There might not always be a lot of sellers motivated to sell on a lease option agreement but there will always be more than you need if you know how to find them! Interest rates are going higher, which means there are fewer retail buyers in the market… the real estate market is changing! Today, the market is more open to creative solutions than ever before. This means more opportunities for investors.
All you need is a way to start the conversation….
Start at the Beginning — For Immediate Success
At the top of my website, there is a very good reason why I offer to let you SWIPE MY BEST SCRIPTS FOR TALKING TO SELLERS NOW! Before you do anything else, you have to gain the seller’s interest in what you can do for them. Sometimes they call you looking for answers and sometimes you make calls on houses being advertised for sale. Right from the second you pick up the phone, you need a plan that engages the seller to learn what you can do for them.
Here is how you get started….
When you are making the call, look up information in public records before picking up the phone. You should be able to see when the person purchased the house and how much they paid for it. From that, you can closely estimate what their monthly mortgage payments are and how much equity they have in the house. You’ll also know how much the property taxes are. You should also look at comparable sales to know what the current market value is. With that information at your fingertips, you’re ready to make the call.
Investor: “I’m calling about the house you have for sale. What can you tell me about it?”
Then you let the seller talk. They’ll tell you things like it has 4 bedrooms, 1-1/2 baths, and 1,800 square feet. Hopefully, they tell you it’s in very good shape and has been recently renovated. If they don’t tell you about upgrades, you want to ask them if renovations have been made. You want to learn what renovations have been made and when. For sandwich lease options, you’re looking for nice white-picket-fence houses that are ready to move in. You don’t want the trouble and expense of a fixer-upper.
If the house interests you, you want to ask how much they are selling it for (even if the price is listed in the advert). From your research, you know it’s worth $240,000 but they might be asking $250,000. This is where you begin to let them know that you are an investor.
Investor: “Let me tell you a little about myself. I buy 3 or 4 houses each month. Some of those I buy for cash to flip but those need to be deeply discounted. Those houses are usually foreclosures, short sales, or owned by the bank. What’s the least you can take for the house?”
Note: “Let me tell you a little about myself” is an important transition to begin letting them know you are an investor.
Seller: “I can probably go as low as $240,000.”
Investor: “Is that as low as you can go?”
Sometimes you have to be comfortable with silence during the conversation.
At this point, you want to wait for the seller to make you a lower offer.
Seller: “I can’t go any lower than $237,000.”
Investor: “I can probably pay more if you sell on contract. Would you be willing to take monthly equity payments until I cash you out?”
Seller: I’m not sure I understand. Can you explain that?”
Offering equity payments is a major shift in the conversation. You want the seller to ask you to explain what you are offering. This allows you to tell them about flexible options and to learn more about what is motivating them to sell the house.
Moving the Conversation and the Deal Forward
Next, repeat your equity payments offer with some clarification and begin expanding on the benefits.
Investor: “Will you allow me to make your monthly payment and take care of all the maintenance until I cash you out? Especially if I can get you more money for your house?”
Seller: “I’d like to hear more so that I can consider that.”
Investor: “Can I come to look at the house to make sure that I’m interested in it? We can talk more about what I can offer you at that time. When would be a good time for you?”
Seller: “Sometime tomorrow works for me.”
Investor: “What time tomorrow? Morning, noon, or evening? One other question, are you the only owner?” (You want anyone with a personal stake in the house to be at the meeting when you explain what you are offering.)
Seller: “Tomorrow at 7:00 in the evening would be good.”
Investor: “We’ll meet at 7:00.”
***end of conversation***
Can you do that?
Can you make 10 phone calls until you have a $40,000 profitable deal?
Can you do that again and again until you are making $100,000 or more every year?
There will be details to work out. As soon as you have the conversation started, you’re going to want all the tools that you’ll need to already be in your toolbox:
- Investing In Real Estate with Lease Options.
- Advanced strategies for Buying and Selling with Lease Options.
- Your Wealth Building Arsenal.
- The fast start with Cooperative Lease Options.
- Add Personalized Coaching.
- Expand to Get the Deed “Subject To.”
- 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.
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