Take Timely Action to Find Lease Options -Begin the Lease Option Cycle

As we already know, COVID-19 has turned the real estate market on its head. Mortgage and rent payments are being missed as each month passes. This is a huge motivator for landlords to get out of the business and homeowners to get out of a house going underwater fast.

This developing market has the makings to perfectly coincide with the steps you take to get in as a sandwich lease option investor. The first step that students are already taking is connecting with these motivated sellers.

This is a Wild & Crazy Time for Lease Options

Sandwich lease option investing is so flexible that you can get into it either backward or forward. That means you can either find the tenant/buyer first and then find the house (the backward route) or you can first find the house and then find the tenant/buyer (the forward route). The forward method is definitely preferred because it is much easier finding a tenant/buyer to match a house you already have under contract than looking for a specific house to match a specific buyer. The first step to find lease options is so easy that a 14 year has done it (I share the story with you shortly).

The reason I’m so excited for students is that these times are perfect for entering the market.

Tips to Get You Started

My many blogs and videos share the ways you can find lease options and here I’m sharing a few of my trade secrets about how to use Craigslist and local newspapers. The first thing you look for are likely candidates in the “For Rent” and “For Sale” sections of these publications. Local newspapers include small cities and towns as well as specialty papers like “Pennysaver” and “Shopper.” These are still widely read, especially by the demographics of people that you are most interested in contacting. Big city newspapers can work but these are more of a second choice rather than a first choice.

Something you want to know about Craigslist is that they make regular changes to how the software works. For instance, you need to know that if you cut and paste the same reply to multiple advertisements, the software will stop forwarding your replies to the people that placed the different ads. The way you make this work for you is by creating 3 or 4 slightly different versions of your reply and then cut and paste different versions over 7 or 10 different ads. You can usually continue rotating the different versions many times. That’s for ads that you are replying to.

For ads that you are running (both Craigslist and local newspapers), you want the ad to appear professional when trying to find lease options. This is as simple as using a business name instead of just asking people to call “Fred” (you) at a telephone number. You can even include a department name such as the “acquisitions department.” Of course, this works best if you answer the phone number using the business name. Something else to consider is that Craigslist is free to place your advertisements. Pennysaver, Shopper, and local papers do work but also cost a little money to run your ads. If you are just getting started, you probably want to focus mostly on Craigslist.

What you are offering landlords and sellers is a unique way to sell their home.

If a 14-Year-Old Can Do This, So Can You

This is a true story about a 14-year-old boy and his father who attended a seminar I spoke at in Houston several years ago. John (the 14-year-old) took careful notes during my demonstration about making live calls to find lease options. This is where I share how to gather information to determine if the person is open to the possibility of doing a lease option.

The next day, 14-year-old John highlighted a few ads while at school and started making calls that afternoon. He had no training other than what he had heard in the seminar the day before. In a short time, he had a seller lead for a lease option who said “yes” they’d like to consider it. But then reality took over because being only 14 and having no experience, he couldn’t and didn’t know how to enter into a legal contract. He went to his father and said, “What do I do?”

John ended up selling the lead to another investor in their local investment group for $500. He gave me a copy of his $500 check. Not bad for a 14-year-old kid and one to two hours of work. John immediately went on to develop a relationship with a local investor. On his next deal (while still 14!), he made 50 percent = $14,000 – of profit for his assistance in the deal. He has since done additional deals for much higher profits.

How and why can a 14-year-old kid do this and yet most adults would not? Is it fear of the seller saying no? Is it fear of the seller saying yes? Either way, it is FEAR! We are afraid of failure. I believe we all have a fear of failure and/or a fear of success. At 14, John was not afraid of failure. Heck, he probably hadn’t even been dumped by a girl yet! He just applied what he learned and tried it. When you know what to say and when to say it, it makes it so much easier.

You are never too old or too young to start investing with sandwich lease options. If you can do the research and pick up the phone to make the calls, you are on your way.

Many of us stop before we even get started because of fear. We let fear get in our way of success.

Details to Practice When Talking to Potential Sellers

You’ll develop your own style of what works best for you as you gain experience. But to get started, here are some tested and proven basics that you should always be using.

Use a kind and friendly voice. Raising your voice an octave or two helps. Men with gruff voices might want to consider having a wife or girlfriend make the initial phone calls.

Keep your sense of humor and keep this fun. Some calls can be quite funny.

As part of the qualification, ask if the seller will allow pets because many tenant/buyers want to have pets. It will affect your rent and selling prices.

Try different rental price ranges. If you are getting all “Nos” about rent to own in the $900 rent price range, move up to $1,000 or $1,200. You are looking for people desperate to cover their mortgage payment and maybe make a few extra bucks. You are not looking for long term landlords who have a paid-off mortgage or very low mortgage.

If you are a real estate agent, you must state that in your phone calls and any advertising that you place. Investors also need precise wording when talking with agents. The wording needs to deal with both option fees and commissions. Agents can be paid on both ends of the deal.

Consider contacting property managers. They can usually make a full commission on the sale and be the property manager in the middle of the deal during the lease period.

Be skeptical of ads offering “rent to own.” These might be decent option lease investments but seldom are. The person usually has the front end of a lease option in place and is looking for a tenant/buyer.

Keep a tickler file for callbacks. Especially if the person shows an interest in a lease option in the future.

If you are in a situation of fear or uncertainty, you overcome it by taking action.

Wendy Patton