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Hi All,
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, I am a new member. I am getting responses to a letters I sent to out of state owners. So far, I have not heard from any VERY motivated sellers. Most bought at the top of the market, some own free and clear but some have a mtg. and are renting the property out now, waiting for the market to come back.
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, Some are paying up to $500 each month to make up shortfall. What creative solutions can I offer them? Most are still underwater or could get close to what they owe if they sell it at retail.
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, I am thinking lease options aren’t wise because they still owe more than property is worth.
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, Thanks!
, KimberlyMalings to out of town owners rarely produces good results UNLESS there is something else going on with the property, like it is vacant, just had to evict a tenant, tenant problems in general.
You don’t need to get an option. You can just master lease with the right to sublease. There is certainly opportunity for that, even if there is no equity. Review Module 7 on Master Leasing for more details.
Many cashflowdepot members are making $10,000 to $20,000 a month just master leasing properties — no option involved at all. It is a great way to build up cash flow quickly.
Jackie, if you don’t have the financial wherewithal to ‘stay in the middle’ in a master lease in case something goes south, what’s the best way to structure the deal? (If there info in this regard in one of the ‘Modules’, I would be glad to listen to it instead of you having to post a long reply. Thanks!)
As you will learn in the training for master leases, there are two ways to structure a master lease
1. you pay the owner a flat amount every month even if the house is vacant. But even with this, you typically set it up so you pay the first $50 of any repairs ( which you pass on to the tenant) then the owner has to pay for anything else.
2. You pay the owner a percentage of what you collect when and if you collect any rent. If the house is vacant, you don’t pay anything. And if any repairs are needed, the owner pays for them.
With a master lease, you are a TENANT. Tenants do not go expensive repairs or pay taxes.
The only difference with a master lease is that you are a tenant with the right to sub-lease to someone else.
Your profit is the difference between what you collect from your tenant and what you pay the owner.
Benefits my owners like are: 1) they do not have to deal with renters as they are not equipped professionally or temperamentally to speak/deal with a renter 2) the house is rented and all they need be concerned with is cashing a check or seeing a monthly deposit to their account 3) the owner lives out of town and a local person (me) is personally vested in seeing the house rented (I make no $$$s if the house is not rented)
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, Highly suggest taking David Tilney’s courses about Property Managment & Master Leasing. It is not obligatory, however David makes it easy to understand over 3 days.Kimberly
Instead of trying to fit everyone in to the “sell below market” hole, it is better to discover if they are motivated to sell, then come up with a custom solution to their problem. Selling below market may not work. But a master lease could work, or buying subject to the mortgage, or getting an option then doing a highest bidder sale, or ….. other solutions.
Don’t get so hung up on buying below market that you completely miss other opportunities!
The only people who can sell way below market are people who have a lot of equity which means they have an older deed date – like 20 or 30 years ago.
If someong bought their house in the last 10 years there is no way they can sell below market. They don’t have much equity. But there are other strategies you can use to make a profit.
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