Joe: Hey, it’s Joe Crump. Here’s another video
in the 8 Dollar Startup Program training series. This one is about the lease option agreement
memo. Here’s what we’re doing. First of all, we’re using the Automarketer. This Automarketer
is going to send out a message to ads of people who are selling their homes on Craigslist
and BackPage, asking them if they’d like to sell their home rent to buy rather than just
renting it. And then some of those people are going to send us a response. Then, with
those people that send us a response, if they say yes, they’re going to get an email that
is sent out through the autoresponder, which is the sequential email program that has a
link in it that sends them to a page that sells them on the idea of doing a rent to
buy deal with us. Joe: That rent to buy seller page looks something
like this. It has an audio in there that explains the whole situation. It has a place for them
to fill out to tell you if they’re interested or not, and also it’s in print; this same
audio information is in print. By the way, you can change out this audio if you want
to have your own voice on there. Right now, it’s just my voice, but you can have your
voice on there if you like, although there’s no need to mess with that if you don’t want
to. Joe: When they fill out this form, we have
a very high percentage of conversion for anyone who fills out this form because it shows that
they’re interested. Once they fill out this form, another email gets sent out to them
because they get put into a different category. You get an email, by the way, if they fill
out this form, and then they get an email saying thank you. Also now that they’re interested,
go to our lease option memo and let’s get the ball rolling. It’ll take them to the lease
option memo page, which looks like this, and this is a form agreement.
Joe: They put in their name, address, and city of their property, the price that they
want to sell their house for, the term of the lease option (usually 1 to 3 years), and
the monthly lease payment that they want. Let’s say it’s $1,200. They just type that
in there. Then, they go down here and they put their email address and their phone number
and evening phone number, and then when they click on this check this box to show your
acceptance of this agreement and that you have the right to make this agreement (that
means they were on the deed), clicking the ‘I agree’ button acts as your electronic signature.
They click on this ‘I agree’ button and suddenly an email goes out with this filled out form
to them and one comes to you, so now you’ve got control of their property.
Joe: This says that they’re willing to lease option to you and that they’re willing to
assign this lease option to a new tenant. And if you don’t find a buyer, then you’re
out of the deal. So you’ve got no risk in the deal, and they’ve got very little risk
in the deal, so it’s a wonderful way of putting these things together.
Joe: So, then we go out there and find someone who’s interested in rent to buy. There’s a
ton of people that are interested in rent to buy. Those are the easy people to find.
We ask them for a down payment and the first month’s payment on the lease. The down payment
is also the lease option fee. Let’s say we’ve got a $150,000 property, we get $5,000 from
the lease option fee and $1,200 for the first month’s rent. The $5,000 comes to us and the
$1,200 goes to the new seller. We’re in and out of the deal and we’re done.
Joe: The seller has a brand new buyer who is solving his problem, stops the bleeding
and he no longer has to make payments on that mortgage. It’s coming in from the buyer. The
buyer is able to get into a home that they never could have qualified for on their own
because maybe they had damaged credit or some other issue. We just make sure they have enough
income to qualify for these properties because we want to make sure we send a good buyer
to them. But we don’t expect them to have good credit.
Joe: So, everybody’s happy in a transaction like this. We’re out of the deal, and we have
no responsibility. It’s not like doing a sandwich lease. It’s sort of like that except we don’t
have any responsibility when the deal is done. Our ethical and moral obligation is to make
sure that we get a good buyer in there and that we educate your buyer and we educate
your seller. The more you do this, the more you’ll be able to do that competently.
Joe: That’s all that it needs to be. The goal here is to do 1, 2, 3, 4, or 5 of these deals
a month with these systems here with the Automarketer just cranking away. The more leads you get
in, the more you’re going to convert. But the better you get at converting, the more
you’re going to convert as well. Not everybody signs this form without your talking to them.
That happens, but it’s less likely to happen than if you got on the phone with them.
Joe: So, we also set it up so that if they’re interested, they contact you, so that you’re
always talking to people that are interested, rather than just cold calling people, which
is what I’ve always had my mentor students do (because I think it’s good practice just
to cold call and get used to talking to people on the phone and get up to bat as many times
as possible). But when you do it this way and they’re calling you, it’s an easier conversion
— it’s a much easier sale to make so you can get those people on board so you can sell
their property and make you’re chunk of money and them move onto the next deal.
Joe: Hopefully, you’ll build a pipeline of these deals so that you’ve got multiple deals
happening at once, so that you’ve got 5 to 15 of these properties that you’re trying
to sell at once. They’re going to sell in one week to four weeks, if you set them up
properly, because they always sell if they’re priced properly. If you overprice them — if
they’re above market rent — and we’re talking about the pricing here, we’re talking about
the monthly payment, not the purchase price. I can always price them over that real value
but I can’t price them over the market rent. Joe: I’ve got to stay in line with market
rent if I want these deals to come together and if I want a buyer to take them over, because
if not, the buyers will always go towards other rentals. I hope that helps.