What I have learned is that in order to stay in business and get continuing business AND have most of that business come from referrals from happy customers, you must make sure your tenant/buyer can buy when they are able to get financed. Just because a market is going up now, does not mean a thing about the future. Doing business all over the place in all types of markets tells you that you can NEVER ever bank on the future.

I ask only what the present value is. This means that unless the market takes a severe nosedive, I can actually help someone buy the house. You see, I am in this business to HELP people, both the sellers and the buyers that I deal with. Now I'm not a charity and I won't do a deal unless I am going to make a profit. However, NOBODY can stay in business if they are simply pumping up the price and just kicking someone out and replacing them if values go down.

I do see a lot of real estate "gurus" teaching this. They teach that it is a good thing to kick someone out, replace them and collect another big deposit from a new person. This is a good way to get many very upset customers. For one, it makes you have to extend out the time that it takes you to pay off the seller if this is a "sandwich" lease option. Sellers want to get the place sold, not just sit around and wait longer and longer to get it sold. Also, it allows more time for problems to occur, such as the seller declaring bancruptcy and causing the deal to be held up in court!

Also, one of the reasons that I get a TON of buyers for my properties is that I do NOT try to sell to them at what I THINK might be what it will be worth at some point in the future. I sell the property to them at what it is worth when we sign it up.

Also, IF the property does indeed appreciate, it helps them buy the property more easily. The vast majority of the buyers interested in buying on a rent to own do not have much money saved for a down payment. IF the property appreciates, this can reduce the amount they have to come up with when they actually get their financing. In fact, one of my mentoring students just closed a deal where their tenant/buyer got money back at closing because they were not being overcharged for the property! Not only that, but this student of mine still walked away with $9,000 at the closing! EVERYONE was happy!

Here's another thing that may happen- What if the tenant/buyer is able to buy in less than 2 years? They are all ready to purchase but cannot get a mortgage because no lender will lend thousands over what the property is worth! What do you tell them then? "Oh well, too bad, just wait for another couple years and it MIGHT just be worth what I'm trying to charge you"?? Would you do business with a person like that?????

If your focus is just on making money at any cost (including not caring if your buyers can actually get financed when they are ready to buy), then you won't last long in ANY business. I want to help my buyers actually buy. This means that I make my seller happy by actually buying from them in a shorter period of time. This means that I help my buyer actually buy the house faster and more easily. This means I get a win-win-win situation where everyone is happy and when their friend/neighbor/family member, etc. has a property for sale, they say "Hey, I know this GREAT guy who helped me buy/sell this house. I'm sure he can help you. Here's his number."

I make my profit UP FRONT. This means I negotiate out a good deal with the seller before offering the property to a buyer. I make sure there is a profit worked into the deal for me when I sign up the deal with the seller. That way, I don't have to hope the market goes up. I don't have to screw over my buyer by kicking them out and just replacing them.

Think about it this way. If YOU were a buyer, would you want to deal with a guy trying to help you buy, or an "investor" looking to squeeze every last penny out of you and who says, "Oh well, get out of my house now" when the house is not worth what they were charging you, even when you could actually now qualify for a mortgage on the house you have been LIVING IN FOR THE LAST TWO YEARS?????? Which one would you refer business to? Which one would you tell people to stay away from? Which one would make you want to trash the house as you moved out ESPECIALLY after not being able to get your NON-REFUNDABLE deposit of several thousand dollars back???? Who would you want to sue?????

Those who have not been doing this for a living have not experienced this. They see only dollar figures. I actually get those dollars because I see and know more than just dollar signs. I have had to deal with all these situations and have had to refine my approach beyond what merely SOUNDS good. I have had to do what it takes to stay in business and buy and sell properties. I am not about hype. I am not about trying to impress people with how much I make, or how much they can make. I try to impress on people how to work deals properly to make money AND stay in business doing deal after deal after deal.

Matt Bowman

P.S. I back up ALL my advice and observations with just over 8 years of full time experience doing these deals. I have seen quite a bit of good AND bad deals. I have made a ton of mistakes and I have learned, through trial and error, what will work and what won't. In order to stay in business and actually be able to close deals, I developed and stuck to a "system" of doing these deals that doesn't GAMBLE on things like hoping the market goes up, or charging someone more than a property is worth.
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