No Bites...Lots Of Nibbles
Looking for some out-of-the-box suggestions here as my property just hasn't moved and it's been 8 weeks!!!
I have a half duplex (standard for the area), FMV $95K, 2BR/2BA/2 Car Carport. Completely repainted inside, new carpet, new tile in bath tubs (and fixtures), new blinds. Rent range for hood is $825-$900 for 2BR. Validated at end of July and again this week via realtor friend & realtor web site.
Trying to do a L/O, asking $875 rent, 3% down and offering $200/mo rent credit. Will do a straight rental at $875/mo with an $850 deposit. Have offered to take 3% over a couple months.
I've put up bandit signs every Friday night within a 1 mile radius and they have generated probably 20 calls a weekend. I'm going through 50+ flyers in the info tube each week, so I know I'm getting drive-by traffic from the signs. I've gone so far as to offer a free microwave or 19 inch color TV with a signed agreement! This past weekend I even spent the $$ for a newspaper ad - no calls from the ad...won't do that again!!
I have had two other investors and one real estate agent come over to look at the property to give me feedback. All of them are scratching their heads not understanding why no one has jumpped on this property.
Problems with the unit??? The outside could use a coat of paint to brighten it up, but doen't really need it yet. Both investors & realtor said don't paint. I have a storage closet outside that the door is slightly damaged and does need replacing. A 1.5 inch crack on the kitchen counter formica.
Open to any and all suggestions....please!!
Thanks.
KAL
Your market may not be used to lease options? Call it rent to own, owner financing, etc. I figured that people were smart enough to know that they are all the same thing but that isn't true.
It may be that people don't understand what you are advertising.
Just a thought from some experiences that i've had
If you get the traffic but no calls, your price may need to be decreased or you should paint/make it look better.
Just my .02
My signs actually say 'Rent to Own', but your right on terms. I'm finding I'm educating a lot of people on the phone.
As far as reduce the price, I can certainly come down on the FMV and then add it back in on the final purchase price. Good idea.
Any thoughts on the 3% down? The $2850 (based on $95K) is scaring a lot of folks. Have any of you split that out over 2-3 months? Do you go lower than 3%. My REI friends are getting 5-6%....but it's 12-15 miles away from my farm area.
KAL
You could take a promissory note for the down payment since you said no one has the cash. Create a note that is secured by anything of value that the T/B has...car title, ATV, etc.
Structure the note payments & term to whatever the T/B can afford per month on top of the rent. Make the note due and payable at the closing.
You could give up on the lease/option and just rent the place. With that little down (and especially if you are carrying all or part of that) I don't see that much advantage in giving the tenant a $200 per month credit toward the purchase price. Rent it out for $825 and keep the money in your pocket.
I'm with the other King. What he said.
[addsig]
I would place and add in the FSBO section of your paper as follows:
You could own this home for less than $3,000 down
Nice 2BR/2BA/2 Car Carport. Call xxx-xxxx
The issue may not be the home; the issue may be how you are responding to your potential customer.
Try selling them the Selling the benefits to your customer like:
[*] Small To No Up-Front Cash Required
[*] Monthly Rent Credit Builds A Down Payment
[*]Try Out Before Buying
[*] Gives Control / Possession of Property With Little To No Cash
[*] Financial Leverage
[*] Longer Terms Mean Greater Profit - You Can Improve Property To Increase Value
Lease op's have provided me a great source for profit because I get
[*] Top Dollar Price For Property
[*] Strong Demand For Buyers
[*] Option Money/Rent Is Tax Deferred
Option when exercised is treated as capital gain or ordinary income
[*] Top Quality Tenants
[*] Above Market Rent
[*] I retains Ownership Of Property
[*] I Receive all tax benefits
[*] If Rent Is Not Paid On Time, Option Is Forfeited
Kings....I'm open to rental or rent2own or sale and tell people that as well as have it on my flyers. I've had this as a rental for 12 years and 2br/2ba has always been slower to rent than my 3br/2ba units. Previously the longest it's ever been vacant is 4 weeks, which was from mid-Dec to mid-Jan. I hate having a unit empty and that's why I thought L/O or sale would be good since I've done so much work on the interior.
JohnMichael...THANK YOU for the different approach. I have been selling the quality of the unit as well as the rent credits, but have been light on the low down payment, build credit, less risk, and try it b4 you own it concepts. I knew someone would hit me the hammer of good suggestions! Thanks again!!
KAL