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How to Sell or Occupy Your Empty Houses Fast
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My intention is to keep every house I buy for at least a year or two, hopefully longer. But that does not deter me from offering it for resale IMMEDIATELY. By offering to sell instead of to rent, I attract a "buyer" mentality. I buy properties creatively so that I can turn right around and offer them FOR SALE with these marketing advantages: No money needed, or Rent-to-Own Classified ad #1 Here we are looking for a buyer to qualify for an 80% to 97% first mortgage. Our ability to carry back a 3% to 20% second mortgage depends on how much equity we have. I can't see buying houses for more than 80% of what I plan to sell it for with creative terms. There are tons of sellers willing to take 10% below market when you show them what they'll might net "at some uncertain date" going through an agent. Then, getting a 10% premium from my buyer is very common since I'm making it easy to buy. Will it appraise? Yes. What if it doesn't? Lower your price...or find another buyer...or keep it. Appraisals occur when someone is getting a new bank loan. In most cases, I sell via methods #2 & #3 requiring no new loan until later. Offering to pay the closing costs will help buyers with good credit and income, yet no savings. This approach will cost 2%-3% of the purchase price... but it gets my underlying loan (hard money or loan taken subject to) paid off fast. If an underlying lien is an owner carry back note, it's discount time! NOTE: Be cautious about anyone taking your property off the market with contingencies. I rarely do. Realtors can play that game. If my buyer wants to get a new loan, we setup the purchase agreement as a rent-to-own (with at least 3% non-refundable purchase deposit) in case their loan is delayed. That way we both have a dead certain move-in and rental payment start date. Yes, my intent is to keep each house I buy for awhile, but if I have a qualified buyer immediately willing to pay my asking price, and I'm getting some or all my cash at closing, I'll take it. Classified ad #2 Here we're looking for someone with money to put down, and challenged credit is OK. I'll sell on a wraparound if I am lucky enough to find a buyer with the 8-12% down I require to give them ownership with extra difficulty getting the house back if they default. I can still offer "owner financing" via a rent-to-own if they only have 3-8% down, thereby KEEPING the house as I intended. They will have 12 months to close, and perhaps a right to extend another 12 months in exchange for higher rent (10% annual increase), higher price (1/2% a month after 12 months) and more non-refundable money down. So I'll sell the property if someone waives a big wad of cash in my face, but I just don't count on it. Typically I will take the first tenant buyer who meets my minimum requirements... Classified ad #3 This ad is run in the HOMES FOR SALE section. A tenant buyer is 500% better than a tenant. They take care of the house. They don't call me. There's no security or pet deposit to manage, just a non-refundable purchase deposit. They pay on time or lose their monthly rent credit, and rent discount. They fix up the property and enjoy the feeling of ownership, because they're planning to buy. But I do risk having them buy the house. My experience is only one out of 3 will close. You can improve those odds by being pickier than I am. Therefore, the average house may resell in 2-3 years after 2-3 tenant buyers (thus meeting my holding period goals). Does the tenant buyer lose out when they don't buy? Not really. I've never kicked out a tenant buyer if they wanted more time. We just renegotiate the terms. When they do leave it's because of a break up, or job change, transfer, or something like that. They may be better off waking away from a 3-5% purchase deposit after just 1 to 2 years than if they bought the house. Compare it to the normal 2-3% in closing costs to buy with a new loan, and then another 6-9% in costs to resell it though an agent. BOTTOM LINE: People want to buy, not rent. Offer flexible, creative terms you can put in your classified ads, flyers, signs, etc. Offering to sell to your tenants reduces your management headaches. Collecting several purchase deposits on houses you bought "no money down" can become a reliable INCOME stream. For every 12 houses you buy, you may wind up selling 4, but you'll still have a net gain of 9 properties. Over time you can build a large portfolio. Taking a "quick turn" marketing approach as described above will also help you CASH in big chucks of equity to pay your expenses, and write yourself some "5-FIGURE PAYCHECKS."
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