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QUESTION
We seem to be missing one critical aspect of our business. Long Story short is , we are up and running, it seems we have no problem finding good properties with 15k to 20k of profit margin. We have several in contract right now. Where we are experiencing our problem is we are not getting qualified buyers to respond to our ads. When I use the word qualified I mean that we have upper end houses that we need to pull rents of 1K-1.5K per month and the people responding to our ads are people looking to spend $300-$450 a month on rent with no money up front. Just wondering if you have some advise?
ANSWER
I do not have a great deal of experience with selling high end properties
on Lease Option because we focus on mid-level homes. We like to be mid-priced
or slightly below mid-price because it is so much easier to find buyers.
A lot more people can afford a mid-priced home.
The number one tool we have for selling homes is not ads, but signs.
Anytime we have had a problem getting phone calls on homes it has been because
we did not properly use our signs. Besides the yard signs we also us
as many directional signs as possible. People who already live or work
in the area may not be actively thinking of purchasing, but if they drive
by your property everyday and see that it is available on flexible terms it
peaks their interest. Hopefully, in your case, the people who already
frequent the area will be more knowledgeable of the prices.
You can help filter your calls by putting the terms in your advertising.
Some idiots will still call, but if you clearly state that the monthly rent
is $1,000 per month then you should eliminate those wanting to spend $300.
In regards to down payments, the most I have received in one chunk was $10,000
on a $200,000 house. It seems like if you get above $10K then you start
dealing with people who have their act together and who can qualify for a
normal purchase.
Rent to own v.s. Lease Purchase...
Also, on high end homes you should consider changing the verbiage to something
like "Lease Option" or "Lease Purchase" instead of using "Rent to Own".
I spent 18 years in the true "Rent to Own" business (appliances, furniture,
etc.) and even in that business we tried to get around the term "Rent to Own"
because it has a negative cognition to it. Often people think "Rent
to Own" and they think "Rip Off". I think this is amplified in high
end homes and I would never use the term "Rent to Own" on high end homes.
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