Here’s the story and the deal:
An investor found our website and contacted us. He had been contacted by someone on the East Coast about lease-optioning his property, and figured he would see if there was someone local he could work with instead. He had been buying and flipping properties during the housing boom, and got caught in the crash. He ended up with several houses that lost value and he was forced to rent.
We did one deal with him, a cooperative lease option. There wasn’t any room in that deal for a sandwich lease, in fact the seller is subsidizing some of the rent as his mortgage is about $200 dollars more than market rent, but he is still happy with the deal as he doesn’t want to be a landlord anymore and is glad to have someone paying at least most of his mortgage note. We were able to make $5000 from the tenant-buyer’s option fee, and the tenant-buyer is ecstatic about the opportunity to finally buy a home of her own.
Once we wrapped up that deal, the investor contacted us about another property he wanted to move. He was asking $1650 for rent, which was quite reasonable for that home in it’s present condition. Using GUTS sales techniques, we probed his situation and found his pain. He didn’t want to be a landlord, and his wife was pushing him to sell the property. I learned that his “bottom line” for the monthly payment was $1450, and he needed to sell for $250,000 due to underlying debt. He had just put in about $15,000 in repairs, so he wanted a deposit of at least $2500. We asked if he would take $1350 for monthly payment where we handled day to day maintenence up to $100 per incident, and a $2500 lease option fee. He said that would be great! So we signed a five year lease with an option to buy for $250,000.
The property still needed some clean up and cosmetic repairs, totalling about $2500 so we immediately got to work. The great part is that this property will now rent for $1800 per month or more, giving us cash flow of at least $450 per month; we should be able to get a minimum of $9000 in option deposit, which will cover our option fee and expenses, and leave about $4000 for our pockets; and property comp sales in that area have been improving so we feel confident we can get at least $285,000 in today’s prices. We plan to lease option on a one to two year term, so if they exercise their option, we’ll make another $35,000 at closing. If they don’t excercise, then we’ll just do it all over again and raise the price. It’s a win-win.
The best part is, the seller-investor is thrilled, and has already contacted us about 2 more properties he would like us to help him with. He said he will contact with other properties when their lease agreements are up, and he is happy to refer us to other investor friends of his.
Looking forward to talking to you again on Thursday morning! Mahalo!
—
Marishka
Claude Diamond-Success Mentor 