Sometimes the best way to get what you want with real estate is to go in through the back door. That’s what I did yesterday when I signed a 5-year lease for a 2 bedroom 2 bath house in Panama. I’ve been trying to buy this house for several years but the owner has not been interested in selling… yet.
The owner contacted me yesterday to say that her tenant was moving out and asked if I’d like to rent the house. This morning I delivered the $600 cash deposit and two copies of a 5-year lease… in español.
The owner was thrilled that I rented the house so quickly because she needed to get my $600 security deposit so she would have the money to return the security deposit to the tenant who is moving out. I solved her problem.
Knowing that she’s not so good with paperwork, I created the lease for her to sign. I solved another problem.
It would have been a huge burden for this owner if had to take the time to find another tenant. I solve another problem being an instant tenant.
My 5-year lease is for $600 per month for a fully furnished house which includes electricity, internet, cable tv, water, trash collection and a weekly gardener. In Panama, this is standard for a rental to be furnished including all utilities.
I can sub-lease for $750 a month. It’s not a lot of cash flow. But, my ultimate objective is to buy the house, preferably with seller financing. So, the logical person to sell the house to will be the tenant who controls this house for the next five years, with the right to renew the lease for five years more.
So, how did I get this deal? Every time I saw the owner, I’d remind her that I’d rent the house immediately if she got a vacancy. She would not have called me if I did not do this.
The owner of this house has a history of getting in to financial problems. I’ve bailed her out a few times before. So, I may have an opportunity to pay for a year’s rent in advance at a deep discount OR to buy the house with seller financing.
How can you get a similar opportunity? Let all the landlords in town know that you will rent their house immediately if they get a vacancy. Remind them every time you see them in person or see their ad on craigslist.
Moral of the story…
Instead of focusing on just one way to “do a deal” it’s better to be flexible and focus on solving owner’s problems. When you can quickly solve owner/seller’s problems today, it will create opportunities for you later. Even though I’d prefer to buy this property with seller financing, I got my foot in the door by renting it for now.
Would you do this deal?
Best of Success… and Freedom,
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3 Comments on “Get More Deals By Solving Problems”
Would I do this deal?
Yes, and twice on Sunday.
Why? – its helps build a reputation / track record as a problem solver. And the owner may have other problems that need solving.
How easy is it to find and keep your sub-lease tenant?
But yeah, it seems inevitable that you’ll eventually buy the property.
Sometime in the future, you could think of offering a portion of your spread (e.g. $75) as a higher lease payment in conjunction with an option; and have some portion of the lease payment go toward the purchase price (effectively a no-interest loan payment).
Seems like a little bit of extra cash could motivate her to get on the path to selling.