|Book Excerpts from "TurnKey Investing with Lease-Options"
You Must Undersell & Overdeliver in Marketing Lease-Options!
One of the pitfalls we have encountered in marketing our houses comes when we oversell or
overstate the benefits and features of the property. Any time we have done this, it has resulted in
an extended vacancy period.
Why? If we oversell and get people excited enough to visit the property, they are ultimately
disappointed when they realize we overstated the benefits and features. This letdown can be detrimental
to the overall selling process as well as our reputation as a company. We never want to
oversell but we do state selling features in a positive way.
Nowadays, we actually talk about the defects, the work the property needs, or how the property
needs paint, carpet, and TLC ("tender loving care"). This reverse selling approach works for
us because when a potential tenant visits the property, they find the property is in better shape than
we described it. This creates a feeling of relief and encouragement for them. When we take this
approach, we often hear them say, "The house isn't that bad." And it makes all the
difference in the selling process.
The Difference Between Owner-Finance vs. Rent-to-Own When Marketing
The terms "owner-finance" and "rent-to-own" are casual terms we use for the
benefit of people outside of our business. We consider them laymen terms, not technical
terms. Both terms are used by investors who lease-option their properties.
However, we have discovered there is a substantial difference in the quality of
clientele we attract. The differences lie within their mindset, their sense of responsibility,
and their ability to provide additional funds for upfront money and a higher monthly
payment. Renters don't like to take responsibility. Potential buyers and owners do.
The term "rent-to-own" tends to attract people who have little or no upfront
money and the renter's mentality. In fact, the term itself begins with the word "rent". So
the emphasis in most people's mind is to rent.
The term "owner-finance" conveys financing and a way to buy and ultimately
own. This is the way we market our company. Owner-financing tends to attract people
who have upfront money and the ability to make higher monthly payments. We like this.
People who want to buy and own a home understand the term "owner-finance". And if
they don't understand the term, we certainly don't want them in our properties.
Dealing with Unexpected Problems with Lease-Option Properties
When unexpected challenges and problems come up or are discovered during the
property preparation period, we note these problems so we can either fix the problem or
disclose it to the tenants.
These problems must be acknowledged and they must be disclosed. The reason
we want to do this is because it is in our best interests to do so. People who move into our
investment property ultimately know more about the ins and outs of our property than we
do. The reason for this is because they live in it. They eventually use every feature,
electrical outlet, window, door, and appliance. It all gets found out in the end.
The last thing we want to have happen is for our tenants to become upset because
they were caught off-guard. When we deal with our tenants, we are upfront
to disclose all the imperfections we know of, but because we have never lived in the
property, it is impossible for us to know every imperfection.
This explanation is often sufficient for most of our tenants. It shows we are
genuine and are attempting to look out for them.
We also have them sign a Property Inspection affidavit to confirm we have given
them ample time to properly inspect the property for damage or defects.
The 6 "S"s of TurnKey Investing
TurnKey Investing is about the 6 basic values that guide what we do. Each of these fundamental
values exists within our preferred method of real estate investing: the Lease-Options strategy.
For investing to be a turnkey system, it has to be simple to understand and
simple to implement. Most importantly, it has to be simple to invest in.
Turnkey investing is about safety, not speculation or "sexiness" of the idea.
Turnkey investing creates safety through experience, certainty, and risk management.
Turnkey investing is about delivering steady performance. It is about carrying
out essential activities in an even-keeled, consistently, steady way. It is about
avoiding dazzle and drama in the day-to-day activities.
The way we protect our investment partners in turnkey investing is about
offering security (collateral), not just a promise or a good story. With real
estate, the investment property is often the back-end security to a secure investment plan.
Within our investment portfolio, our turnkey investments generate spendable
cash flow each and every month. This is not perceived equity or compounding the
returns. We create spendable returns for ourselves and our investment partners.
They can choose how to deploy the spendable returns they receive.
Turnkey investing is about creating and developing a duplicatable system of
tasks that can be used over and over. We create and execute a management,
marketing, and investing system with a turnkey philosophy in mind.
Matthew Chan is the author of
"TurnKey Investing with Lease-Options",
"The TurnKey Investor's 'Subject To' Mortgage Handbook", and
"The TurnKey Investor's Lease-Option Documents Collection".
You may contact Matthew at 706.565.5090 or you can email him at: firstname.lastname@example.org.
You can also find Matthew at MatthewChan.com.
Back to Real Estate Investing Articles