I’m always doing various tests in my business. For example, if I’m doing a new mailing to 3,000 landlords in my area I will send a letter with one headline to 1,500 landlords and I’ll test another headline with the other 1,500 landlords.
I then keep track of which letter gets more calls and more deals and I will of course use that letter in future mailings. In fact, I’m always testing letters and postcards against one another so that I’m continually improving my marketing and increasing my results.
Well, in addition to letters and postcards, I also test classified ads and ads that I run for my rental properties. In these ads I test the rental amount and the amount of rent credits and I’ve found that giving $300 a month in rent credits is the right amount to get people interested in your property.
If you give people only $200 a month…
They don’t get excited and it’s not a big enough of a number to motivate them. And, unless you’ve got a lot of equity in your deal, giving $400 a month can add up to too much money. So, $300 seems to be the sweet spot.
But again, it all depends on how long you’re going to give these rent credits for and how long of an option agreement you’re going to give. Personally, I usually give my tenants a 12 month option to buy the house. If after 12 months they haven’t been able to qualify for a loan then we re-evaluate and I decide whether or not I want to give them another 12 months.
Of course, in most instances…
If I have good tenants and I know they’re close to qualifying I will sign another 12 month lease with them. But, if it doesn’t appear they’re ever going to be able to buy the house then I get rid of them and try and find new tenants.
The best way to find new tenants or any tenants for that matter is by yard signs, Craigslist ads and classified ads in the local newspaper. The yards signs should be all over the neighborhood (with directional signs pointing to the house) and should say something along the lines of “Rent to Own, Bad Credit OK, No Bank Qual.”
The classified ads should have a similar headline but they should also give the rental amount and say FREE $300/mo rent credits. When you put the word “free” in there you will generate a lot of calls from people wanting to know what the free $300 means. This means you better be prepared with a good script to explain how a tenant gets rent credits, how it goes towards the payment of the house and how if for some reason they don’t end up buying the house that all rent credits disappear.
The Craigslist ad will contain the same information but you should of course include pictures and include more details of the house and you can also explain how rent credits work in the ad so you don’t have to explain it over and over again on the phone when talking with people.
So, if you aren’t giving $300 a month in rent credits, you should try it today and see if it helps you fill your lease option properties more quickly, with better quality tenants. Also, don’t forget to constantly test all aspects of your business to help you close more deals and become more successful – sooner.