Selling one of your properties on a lease-option gives you the biggest benefits of renters and buyers without the downsides that normally go along with selling or renting out your property.
When you lease-option your property you get the best parts of having a renter: monthly streams of cash-flow, tax benefits of maintaining ownership, loan amortization, and a healthy chunk of the future appreciation. You get all this without having to deal with the headaches and hassles of traditional renters.
When you lease-option your property you get the best parts of having a buyer: a large chunk of money as an up-front option payment, someone else who will take care of the day-to-day maintenance of the property, and a large profit when your buyer gets a new loan on the property and cashes you out.
Here are the four steps to sell your property using a lease-option:
Step One: Spread the word
There are three magic words to help you find your tenant-buyer for your property. These words go in bold, large print in all your advertising for the property. They are: Rent to Own. People instantly know what "rent to own" means and they also know they want it.
The two best places to invest in advertising your properties are your local newspaper and in signs around your property. Place a small classified ad in the "For Sale" section of your local paper. Also put a large "Rent to Own" sign in the front yard of the property. And put twenty to thirty signs around the neighborhood on all the major access roads leading past the property.
These signs can be professionally printed, but chances are they won't last long so do them as cheaply as possible. I have found that handmade signs on inexpensive posterboard work as well as the more expensive signs.
Both your classified ad and your signs should have the phone number of a voice mail box where you have recorded a 60-90 second message singing all the biggest benefits of the property and how easy the rent to own program makes for them to be able to own it. Use your voice mail as a screening device-ask callers how much money they have to work with as a down payment.
When you run a "rent to own" ad your biggest problem will be getting too many calls! By screening callers through a voicemail box you will spend your time calling back only those who have a healthy sized chunk of cash to give you as their up-front option payment.
Step Two: Calling back prospective tenant-buyers to set up a group showing
Have you ever been faced with a prospective buyer who just won't make up his mind about whether he wants the property or not? Or have you ever raced over to one of your units to show it to someone who just didn't show up? There is a better way of doing it-group showings.
Whenever you can get several prospective tenant-buyers all to look at the property at the same time your property just became more attractive. You are creating a competitive environment and that means the person who wants the property needs to act fast or they will lose out to someone else. This competition will be your biggest aide to closing the deal.
The biggest mistake you can make when you are calling back the people who left their name and phone number on your property voice mail box is to invite them to a "showing" for the property. Instead set a definite "appointment" with each person to meet them at the property to have them take a look. Simply set each individual appointment all at the same time! This way not only are you creating that competitive situation, but you are also protecting your time since if two out of the nine people scheduled to meet you don't show you still have seven people to show the property to.
Step Three: Get them to fill out an application on the spot
Some people won't want to hurt your feelings by saying no. Instead they will ask for an application and tell you they will send it in later. Don't fall for this common pitfall. Simply tell them that if they are really serious about the property then they should take a few minutes and fill it in right there. Also make sure you charge $10-20 for each application. Not only will this pay for your credit check of each applicant, but it will also screen out those last few people who are not truly serious about the property.
Step Four: Choose the best person and call to give them the good news
Speed is of the essence here. If you have someone who wants to have the property who has a healthy option payment and good monthly income I recommend that you get a non-refundable deposit from them to hold their position to rent to own your property.
You should collect this deposit as soon as possible. Of course you will make this agreement subject your satisfactory approval of their application (if they don't pass your evaluation your deposit agreement should say you will return their deposit to them and cancel the agreement.)
This is how you market your property as a "Rent to Own" property. Next month I'll explain how you can get above market prices and cash-flow for your properties. You'll learn exactly how to price your "rent to own" property so it sells fast and makes you a large profit.
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