One of my favorite (free) marketing methods is emailing landlords on Craigslist. And right now landlords are desperate and many of them are willing to do a lease option with very favorable terms.
However, when I’m at real estate meetings I often get asked, “Jason, when I’m working with a landlord on a lease option, how do I let him know that I won’t be renting the house myself and that I’ll be putting a tenant/buyer in the property?”
This is a great question and if you don’t handle it the right way you can lose the deal. For example, recently I talked to an investor who was meeting with the seller in person at the rental property when he told him he was an investor and wouldn’t be living in the house himself. Let’s just say the owner wasn’t happy to hear this and the deal didn’t end up closing.
Don’t let that happen to you.
The first thing to remember is that you want to let the owner know this on the phone, however, not too soon. You see, when you first get on the phone with a seller you want to see if they’re even interested in working with you. You want to see if they are willing to give you a 5-year lease with option to buy on the property. Also, during this time, you are going to be answering all of their questions about how a lease option works.
Once you determine that they’re interested in doing a lease option then you say, “I’m a private real estate investor in Denver, CO and I’ve got tenants I’m looking to put into rent to own properties right now. However, your agreement will be with me and I guarantee your rent even if my tenants stop making payments to me.”
Now, the script is a lot more in depth than that, but you get the point. If you tell a seller immediately off the bat what you’re planning to do, you’ll scare him off. You need to first find out if he’s interested then you sell him on all of the benefits of how a lease option will make his life easier. Then you smoothly transition into how you’re an investor and won’t be living in the house yourself, but that you guarantee the rent and the owner doesn’t have to worry at all about the tenants.
The guarantee is huge.
As soon as the owner realizes you won’t be living in the property yourself, a whole other set of questions and objections will pop up. If you know your scripts, all you have to do is answer every question and things will go smoothly if the owner is motivated.
Also, constantly remind the owner that the agreement will be with you, and that you guarantee and take care of everything. That if the tenants trash the house it’s your responsibility, if they don’t pay rent that it’s your responsibility, etc.
In short, if you have confidence and know your scripts, closing lease options should not be difficult at all.