If I were to look for help renting-selling my property online, the following would be a list of my obvious concerns when it came to who I decided to work with on the transaction.
Especially if the help I ended up getting was from someone out of state, and whom I may never meet or see. Maybe You Can Relate to
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1) Scams: The Internet is full of them. How do I know you're not one of them? |
Answer: Indeed there are tons of scams on the Net. I recommend you always consult a real estate attorney first, and never send wire money to anyone.
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2) What's the catch?: How do you get paid? |
Answer: No catch. We get paid by the "end" tenant-buyer to whom we assign the Option rights based on your pricing and terms.
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3) Does Title stay in my name? What about the mortgage? |
Answer: Yes, both Title and the mortgage stay in your name as this is a rental with the "option" to buy - not a sale.
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4) Do you have tenant-buyers for my specific house right now? |
Answer: Hard to say until we see your home, and determine if it is priced correctly. If yes, then yes, getting a tenant-buyer is easy for us.
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5) What if they destroy my house? What then? |
Answer: While anything is possible, consider that a tenant-buyer is putting down non-refundable cash upfront that far exceeds what a straight-renter puts down (who has no intention of buying). Which is more risky?
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6) Do your buyers pay us directly? |
Answer: Yes, they will pay you your portion (the "Option Fee") directly and our "Option Assignment fee" will come directly to us.
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7) Are you licensed in my state? |
Answer: No, we do not represent anyone but ourselves, We act solely as Private investors.
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8) How fast can you find someone for our home? |
Answer: Usually 7-14 days when the rental price is priced correctly. Longer if it is not.
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9) Can my real estate attorney review your contracts once drafted? |
Answer: Yes, of course. We encourage that both your real estate attorney and accountant advise you as we do not provide legal nor accounting advice.
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10) How do you qualify them? What's the process? |
Answer: In a nutshell, we check everything but their credit scores, since if they had perfect credit, they could qualify for a regular bank loan and wouldn't need you or I. They MUST remove any doubt, however, of any concerns of their current financial strength, so you feel 100% comfortable. We send all documentation to you for your review before assigning the contracts, of course.
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11) I'm listed with a Realtor. Can you still help me? |
Answer: Yes, since we are not Realtors in your state, and we are technically buyers of the "Option" contracts, assigning the contracts to an "end" tenant-buyer for a profit, there is no conflict of interest with your Realtor at all.
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If these are concerns that you've had in your mind as you search the Net for help, solutions, and ways to sell your home without paying commissions or fees, you're not alone.
And frankly, I don't blame you. I would think the same things. Hopefully these answers have shed some light on who we are, what we can do for you, and have helped you better determine if working with Diana and I would be a good fit for your specific needs and wants.
My Wife Diana and I Believe In Full Transparency
and Full Disclosure (We avoid a lot of drama this way)
We too have fears and concerns, at times, as we've been "burned" by folks that we've worked with in the past, so trust me when I say, we understand. After all, though we sign contracts, for some reason there have been sellers that have tried to circumvent us and steal buyers we've sent them.
So cocnerns can really goes both ways, right?
There's an old saying that I love that goes something like this: "That which we compromise to gain, we ultimately lose."
So What's the Point?
If you have the questions I mentioned above, or others (since this is not an exhaustive list), please reply to this email now.
I will personally answer you questions, and there is no obligation to work with us. Our goal is to help you, the "end" tenant-buyer, and ourselves, win. We don't want you to spend thousands of dollars of needless commissions or fees, or ultimately have to lower your price over and over again, because your house is sitting on the market collecting dust.
Difference Between a Lease-Option and a Contract for Deed Explained by Attorney Bill Bronchick
5/11/2016
Attorney Bill Bronchick explains the differences in each of these types of contracts and what you should consider before selling in either fashion. Since I'm not an attorney, and I do not ever give out legal advice, I figured I'd let a real estate attorney like Bill Bronchick explain it all to you here in this video:
Keys Differences to Consider Before You Sell
Using Either a Lease-Option or a Contract for Deed
In the last 7 years of working with home owners, wholesale real estate investors, landlords, property managers, and Realtors, I've noticed quite a bit of confusion between these two exit strategies, so the goal of this blog and the video above, is to help you understand the fundamentals of both before you enter into a contract.
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- Usually you can safely collect 3-5% upfront (non-refundable) and if the "end" tenant-buyer fails to pay their rent on time (or at all), you can evict them.
- This is exit strategy is not considered a sale as the tenant-buyer has the "option" to buy and the "option" not to buy.
Contract for Deed:
- Usually you can ask for 10-20% down upfront (non-refundable), and if the end buyer fails to pay their mortgage, you'll need to foreclose on them.
- This exit strategy is considered a sale.
Of course, you want to sell at the highest purchase price, but since you're selling, "rent to own" (Lease with the Option to buy), if you overprice your rental amount, your house will sit and it matters not how much you want for your over all purchase price.
Get this part wrong and you'll only succeed in showing your home to your nosy neighbors.
Often when my affiliate team and I inform a seller that we can get them their full asking price, and help them fully avoid paying any commissions or fees in the process, some sellers will get the nutty idea that they can simply ask whatever rental price they want - and they'll get it. Wrong.
With the Internet at the fingertips of 5 year olds these days, it takes but a few seconds for a home seeker to plug in the area the want to live in and the price range they want to pay.
Take Craigslist.org for Example...
All your tenant-buyer has to do is plug in their criteria, and within seconds they can quickly shop you (and your competition) and decide if they feel your priced right - or over priced.
Granted, you are selling, rent to own, and you're giving other great terms that may very well justify a higher price, but... that doesn't mean that the tenant-buyer population, at large, has any real clue of why they should pay more for your home over your competitors. And while you may be perfectly justified in charging $100-$200 more per month for your rental price, being justified in charging more and actually succeeding in renting/ selling your home to a tenant-buyer are two different things.
I recommend that you make your money on a higher Option price (the purchase price you'll sell your home for) on the back end, instead of raising the rent on the front end (at least in the beginning). There are other ways you can be fully compensated for the great terms you'll be extending your future tenant-buyer that won't price you out of the market.
To price your rental amount correctly, there are several ways you can start, and while the following list is by no means exhaustive, it's fair to say that it's a quick, easy, and free way that you can get an idea of how much you should charge.
#1: Rent-O-Meter.com
- Basic free report limit is 10 reports every 30 days.
- Quickly allows you to enter your address, desired rental amount, and gives you a "metered" range showing you if you've priced your home right, too low, or too high.
#2: Zilpy.com
- Uses advanced data mining algorithms
- Shows how the target property rent compares with the neighborhood, zip code and the city.
- Zilpy Cashflow Report is used by thousands of Landlords, Real Estate Professionals and Investors across the country..
#3: Zillow.com's "Rent Zestimate"
- According to Zillow, "A Rent Zestimate (pronounced ZEST-ti-met, rhymes with estimate) is Zillow's estimated monthly rent price, computed using a proprietary formula. It is a starting point in determining the monthly rental price for a specific property."
- The key takeaway here is that you can plug your property's info into these 3 free sites and within a few minutes total, you can get a pretty good gauge as to what you can charge tenant-buyers for your rental price.
- Don't get greedy and raise your rental price several hundred dollars more than the market rent. You'll only succeed in getting nowhere fast.
- Make your money on your Option price (purchase price), instead of over pricing your rental amount.
It is when you sell on terms, and when you use the "Auction" strategy to sell your home.
When you sell your home, on a Lease-Option ("Rent-to-Own") and you use the same "Auction" strategy I've used for the last 7 years to move our properties in a week or less, you place yourself in a unique position of control that others home sellers won't experience.
The "Auction" Strategy That
Sells Your Home In Just 7 Days
- You first market your property to tenant-buyers in a way that appeals to them, and in a way that gives you the competitive edge over your competitors
- In exchange for a sizable down payment (the Option fee), you allow them to qualify for your home without having perfect credit, or other attractive terms such as having less than the bank required time-on-the-job or down payment, etc.
- You ensure that your rental price (arguably the most important of your pricing) be at market rent - not above it
- You then invite all potential tenant-buyers to a one-hour showing on one day (preferably on a Saturday or Sunday)
- You ensure that all tenant-buyers will commit to coming during the same hour so they see each other, and quickly get the feel that they are in a "auction" type situation, and they had better decide real quick whether or not they're going to make an offer on the home
Getting Higher-Than-Market
...for Your Home
And instead of having everyone try to low-ball you (a.k.a. insult you with low offers for your home), you'll have folks bidding upward of your initial asking price.
Not to mention the fact that, from the start, you can ask 10-20% above market, since, in exchange, you are providing forgiveness for poor credit (assuming their in a strong, financial position today and the poor credit is a thing of the past, of course), and you're also allowing them 1-3 years to fix their credit scores, save up for the bank-required down payment, and/ or complete a little more time on their job, so they can now qualify without a problem.
I usually recommend a longer lease-term period (3 years) the higher in price you go, so as to justify that higher price, since the current market pricing may say you're too high.
The Takeaways to Consider
Before Using the "Auction" Strategy
- Price your rental amount at market or slightly below to get the biggest amount of tenant-buyers to attend your showing (a.k.a "auction"). Use RentOMeter.com, Zilpy.com, or Zillow.com to get a gauge (not an exact price) on what your correct rental price should be.
- Set the showing for just one hour only and on one day only.
- Extend out your lease term in proportion to the amount your asking for the home over what the current market price says it should be
- Do not ask more than 10-20% over what the current market price is.
FSBO? How to Get $5,000 (or More) In Repairs When You Sell, "Rent-to-Own" (a.k.a. Lease-Option)
5/2/2016
In fact, it's easier than you think.
It's really just a matter of adding a clause that says something like:
Tenant-Buyer(s) responsible for the first $5,000 in any and all repairs to the home during the lease-Option period. All needed repairs must be first approved by the home owner(s) before any work is performed, in writing, and all work must be performed by a licensed and bonded repairman.
I usually use the $5,000 range for properties in the $200,000 Option price range, so if the home is a higher-end home, say in the $500,000 range and above, you can always increase this amount to say, the first $10,000 in repairs, etc.
You'd be amazed at how easy it is to have your future tenant-buyers agree to this. And that's not because you're taking advantage of them in any way, shape, or form. It's simply that in exchange for equal value, the tenant-buyer gets a bunch of perks that make agreeing to this arrangement a "no-brainer" like:
- No credit checks required for them to rent-buy the home
- No banks to worry about for 1-3 years
- The potential to achieve home ownership, instead of wasting their money in rent
- Having a portion of their monthly rent apply towards the purchase price each month
- And more
Interested In Learning More About How a,
"Rent-to-Own" Sale Could Work for You?
Author
My name is...
Russell de la Peña, and I am a former Realtor with both Keller Williams Realty and Re/Max City Horizons out of Denver, CO. I'm originally from Los Angeles, CA, where I currently reside today, and I have authored a few books related to real estate investing and credit repair. I own a creative seller financing training school online and work with, and serve, new and seasoned real estate investors alike for a living.
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Auction Strategy
Buyer Doesn't Buy
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What Is A Lease Option