Most real estate investors don’t know how to prescreen their incoming leads. You need to be able to quickly eliminate the suspects in this business and only deal with the prospects. You only want to work with people that want to do business with you, period.
You should be able to instantly look at the numbers and decide if this is a deal for you to pursue. Whether it is a seller or a buyer. The information you want from the seller is their asking price, their loan information, repairs on a property and what the seller thinks their house is worth, and know at a quick glance if this is a property that you want to work with or not. For a buyer, you want to know three main things: what’s the most they can afford to put down, what’s the most they can afford monthly and their credit standing. Of course this is simplified, but the point is prescreen and proceed.
You need to get really good at prescreening your deals, because if you try to over analyze something and you’re struggling to even know if a new lead that comes in is a deal for you, then you need to go back to the basics. You need to understand and get very good at prescreening your incoming leads. So, that way you can get rid of all the time wasters (suspects) and only focus on the prospects.
That leads to another mistake made by most real estate investors when it comes to buyer leads. The big oops is putting tenants into a house without collecting enough of an option fee. Boy oh boy, does this mistake ring a bell for me. Let me share. I had a house that I put a lease option tenant into the property. And it was a house that I had vacant for a little bit longer than normal and was starting to get a little bit antsy. I wanted to get that thing occupied. I was just tired of writing a check every month and not having a check coming in.
Well, stupid me, I go and I put a tenant into the property with pretty much no money from them. And I got sloppy and then I had to evict them. They didn’t make the first month’s rent payment. And frankly, it’s my own fault.
So, don’t make the same mistake that I did. If you’re going to put lease option tenants into your houses, make sure that you get at least 3% to 5% of the purchase price from them. That is the guidelines that I usually follow. I made an exception to the rule and I dealt with it, but that’s life. I made the decision and then I had to suffer the consequences.
So, for your sake, if you’re going to do lease option properties and you’re going to put tenants into these properties, please get as much of a down payment, a non-refundable option fee from them that you can. Do not put tenants in properties without collecting enough money from them.
If you put them in for just a few hundred dollars, I can virtually guarantee you that you’re going to be getting that house back a lot quicker than you thought. So, take my advice on this one. It’s not worth the headache.
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