If you’ve been around me for a hot minute, you know I say that we’re in the marketing business, not the real estate investing business. I talk about it ALL the time. In fact, I just wrote a whole email about it recently.
But, marketing can get expensive. If you don’t have a good marketing budget, you can’t market as much, which means fewer leads come in.
So, of those fewer leads, you need to get more of them accepted to close the deals and make profits, right?
How does this sound:
Instead of 1 out of every 20 offers accepted — get 3 offers out of every 20 accepted. Aha!
It’s actually a simple formula…
If the cost of marketing has gone up, here’s how to get it back down — you make a few different kinds of offers to the seller:
- cash offer
- lease option offer
- owner financing offer
Creative financing is a wonderful thing. It gives you options.
See, creative financing allows you to make offers for the price that the seller wants for their house. (Obvi, the numbers have to make sense for you too.)
I told you the formula is simple: Make sellers different kinds of offers.
Let’s say you talk to a seller, and you worlds apart from them on the price. They want $200,000, you have to offer $150k in cash to make it work.
What if you offered them $200,000 with owner financing or they lease it for a period of time before they buy it and you cash them out?
You can give them the price that they want as long as they give you the terms that you want.
It's either price or terms. If they're stuck on their price, then you can give them that price as long as it's on your terms.
Here's the beautiful thing about creative financing deals too — whether it's a lease option or owner financing, what if they can't do 5 years? Ok, make it 3 years, but the price can be negotiated down…. the monthly payments can come down… maybe your down payment or your option deposit comes down.
I don’t have to tell you that EVERYTHING is negotiable in real estate.
What if they have to have $1,400 for rents because that's what their mortgage payment is. Well, maybe you can get them $1,400 if they're willing to owner finance or lease option for 10 years.
So, with a cash offer, the only thing to negotiate is the price. And that’s doable… but what if you could negotiate terms?
So many options open up when you think about and make different kinds of offers. Understand and use creative financing in your business.
Find out the seller's situation by asking the right questions…
- Find out how quickly they need cash. If you can get them more cash, can they wait for it?
- What are they going to do if they can't sell their house, are they going to rent it out?
- Would they rather you deal with the tenants and the hassles of managing a rental property or would they rather just deal with the tenants themselves?
Talk to sellers and give them options — you're going to make a lot more money in this business when you do.
Start making different kinds of offers.