How to Sell or Occupy Your Empty Houses Fast (Part 1)
by Richard Roop
My intention is to keep every house I buy for at least a year or two, hopefully
longer. But that does not deter me from offering it for resale IMMEDIATELY. By
offering to sell instead of to rent, I attract a "buyer" mentality. I buy
properties creatively so that I can turn right around and offer them FOR SALE
with these marketing advantages:
- No money needed, or
- No bank qualifying owner financing, or
- Rent-to-Own
Classified ad #1
NO MONEY NEEDED: Owner can finance down payment
and pay all closing costs. Nice 3 bed, 2 bath, 2 car home, views, privacy,
$159,500.
24 hour recorded message 1-888-555-1111 Box 1234
Here we are looking for a buyer to qualify for an 80% to 97% first mortgage. Our
ability to carry back a 3% to 20% second mortgage depends on how much equity we
have.
I can't see buying houses for more than 80% of what I plan to sell it for with
creative terms. There are tons of sellers willing to take 10% below market when
you show them what they'll might net "at some uncertain date" going through an
agent. Then, getting a 10% premium from my buyer is very common since I'm making
it easy to buy.
Will it appraise? Yes. What if it doesn't? Lower your price...or find another
buyer...or keep it. Appraisals occur when someone is getting a new bank loan. In
most cases, I sell via methods #2 & #3 requiring no new loan until later.
Offering to pay the closing costs will help buyers with good credit and income,
yet no savings. This approach will cost 2%-3% of the purchase price... but it
gets my underlying loan (hard money or loan taken subject to) paid off fast. If
an underlying lien is an owner carry back note, it's discount time!
NOTE: Be cautious about anyone taking your property off the market with
contingencies. I rarely do. Realtors can play that game. If my buyer wants to
get a new loan, we setup the purchase agreement as a rent-to-own (with at least
3% non-refundable purchase deposit) in case their loan is delayed. That way we
both have a dead certain move-in and rental payment start date.
Yes, my intent is to keep each house I buy for awhile, but if I have a qualified
buyer immediately willing to pay my asking price, and I'm getting some or all my
cash at closing, I'll take it.
Classified ad #2
NO BANK QUALIFYING owner financing.
Nice 3 bed, 2 bath, 2 car home, views, privacy,
$159,500. 24 hour recorded message 1-888-555-1111 Box 1234
Here we're looking for someone with money to put down, and challenged credit is
OK. I'll sell on a wraparound if I am lucky enough to find a buyer with the
8-12% down I require to give them ownership with extra difficulty getting the
house back if they default. I can still offer "owner financing" via a
rent-to-own if they only have 3-8% down, thereby KEEPING the house as I
intended. They will have 12 months to close, and perhaps a right to extend
another 12 months in exchange for higher rent (10% annual increase), higher
price (1/2% a month after 12 months) and more non-refundable money down.
So I'll sell the property if someone waives a big wad of cash in my face, but I
just don't count on it. Typically I will take the first tenant buyer who meets
my minimum requirements...
Classified ad #3
RENT-TO-OWN: Nice 3 bed, 2 bath, 2 car home, views, privacy.
Pets OK. Rent credit. $159,500. 24 hour recorded message 1-888-555-1111 Box 1234
This ad is run in the HOMES FOR SALE section. A tenant buyer is 500% better than
a tenant. They take care of the house. They don't call me. There's no security
or pet deposit to manage, just a non-refundable purchase deposit. They pay on
time or lose their monthly rent credit, and rent discount. They fix up the
property and enjoy the feeling of ownership, because they're planning to buy.
But I do risk having them buy the house. My experience is only one out of 3 will
close. You can improve those odds by being pickier than I am. Therefore, the
average house may resell in 2-3 years after 2-3 tenant buyers (thus meeting my
holding period goals).
Does the tenant buyer lose out when they don't buy? Not really. I've never
kicked out a tenant buyer if they wanted more time. We just renegotiate the
terms. When they do leave it's because of a break up, or job change, transfer,
or something like that. They may be better off waking away from a 3-5% purchase
deposit after just 1 to 2 years than if they bought the house. Compare it to the
normal 2-3% in closing costs to buy with a new loan, and then another 6-9% in
costs to resell it though an agent.
BOTTOM LINE: People want to buy, not rent. Offer flexible, creative terms
you can put in your classified ads, flyers, signs, etc. Offering to sell to your
tenants reduces your management headaches. Collecting several purchase deposits
on houses you bought "no money down" can become a reliable INCOME stream. For
every 12 houses you buy, you may wind up selling 4, but you'll still have a net
gain of 9 properties. Over time you can build a large portfolio. Taking a "quick
turn" marketing approach as described above will also help you CASH in big
chucks of equity to pay your expenses, and write yourself some "5-FIGURE
PAYCHECKS."
Bio:
Full-time investor Richard Roop has been called The Marketing Consultant for
Real Estate Entrepreneurs. He is the President of Bottom Line Results, Inc., a
real estate acquisition company located in Woodland Park, Colorado since 1996.
As a successful marketing consultant since 1984, Richard specializes in
providing innovative business and marketing advice to real estate entrepreneurs.
He is the author of the "How to Sell Your Home in 9 Days" book. Richard Roop's
articles have appeared in various entrepreneurial, real estate and marketing
newsletters across the nation.