If you wanted to invest in Real Estate today and had little or no money, one place you would look would be single family homes in NICE neighborhoods. You would find homes that would fall into any of the following categories:
1. Homes that are vacant or have a “For Sale” sign in the yard,
2. Homes where owners are having trouble making their loan payments, and
3. Homes listed as “For Sale By Owner” or “For Rent” in the newspaper.
I could even put up a small ad myself reading, “House to Rent Wanted.” How do I contact these owners? Well, if they still live in the house, I’d set up a meeting, preferably at the house, where I could sit down with the owners and negotiate a deal.
In my discussion with the owners I would try to find out what the REAL situation is. I would ask a series of questions, such as:
Why do they want to sell or rent?
How much is owed on the property?
How much are the monthly payments?
Are the monthly payments up to date?
How much are the average monthly utilities?
Are there other expenses such as Community of Owners fees, etc.?
Based on how I felt after getting this information, I would make the owners an offer to lease their home with lease payments equal to the current monthly payment. This offer would give me the right to sublease the property. It would also require a 2-year option to purchase the property for an amount equal to what they owe on the property now. The “Option Agreement” would contain a clause stating that I could renew the option for an additional 2 years with a payment of $500.00 at the time the option was renewed. Also, it would make the lease conditional on you finding a tenant to sublease the property within 60 days.
He would then advertise, “Lease to Own – No Problem Credit” in the local papers and any free papers he could find. I’m sure I would get a lot of responses to my ad. If I don’t, nothing happens, my 60 days expire and all I’ve wasted is my time, which IS valuable.
There are many people with some cash who want to own a house; however, they have bad credit or some other reason why they cannot qualify for a loan to purchase a home. I would need an option fee of $2,000.00 or more depending on the capacity of my group and also a rental amount of at least $100.00 above the amount I am paying. The sale price would be at least $5,000.00 above the current mortgage balance; $5,000.00 more than my option price. It would then give you a credit of $100.00 per month for every month you pay your rent on time. My experience has been that leasing options are really motivated by applying a credit of part of the rent towards the purchase price.
I am confident that in today’s market I could repeat this process over and over again. I’ve done it when the market wasn’t as bad as it is now. In San Antonio we had over 1,500 properties listed for foreclosure in January 2010; the MOST in 20 years.
THE OFFERS ARE HERE! As a well-respected former investor, entrepreneur, and builder, Bill Zeckendorf, said, “Money is made when blood runs in the streets.” Well folks, it’s running in the streets now.
By the way, if you are an investor or want to be, I recommend the book “Zeckendorf”. You can find it on Amazon. This man, William Zeckendorf, was the innovator of many things we have today; Shopping Centers, Condominiums, etc. Returning to our owners whom we wish to contact; How do we find them? You can do this online by visiting his county’s Tax Assessor website. By entering the address, you should be able to find the owner of that property.
These publications are the opinion of the author who is not engaged in providing legal, accounting or investment advice. If such advice is required or desired, the services of competent professionals should be sought.