I have a lease-option on a 2 bedroom/2 bath condo in Reston. It's in one of the older areas and in a garden-style building built in 1974. It's also in one of the cheapest/most affordable areas of Reston. It's an ethnically diverse neighborhood. But it's not a slum. The 2 bedrooms/2 baths had sold for as much as $280,000 back in the spring of 2005. They've gone down since then. Most are listed on the MLS for $239,000; a couple for $229,000. (That makes them among the cheapest 2 beds/2 baths in Northern Virginia.) When I signed the lease/option, the listed prices were $249,000-$259,000. They rent for about $1,400--that includes utilities, since the condo fee (a reasonable $160) includes utilities.

 

I've been trying to find a tenant-buyer for months. Tried ads in the Washington Post (both "for sale" and "for rent") along the lines of "Rent-to-Own. No Bank Qualifying. Only $1,495 per month..." etc. Four ads and $400 later, no calls. (Maybe one or two, literally.) Bought ads in the free throw-away papers distributed to commuters. Nothing.

 

I've tried two postcards to the residents in the condo complex--about 400 of them. One postcard promoted the actual unit: "Rent-to-Own." The other offered a $1,000 finder's fee for anyone finding me a T/B. Nothing. The other weekend, I took some fliers and managed to put fliers on the doors of about 100 of the 400 units before the heat, humidity, and aching legs forced me to stop. Nothing yet.

 

I've visited open houses held by real estate agents at other units in the complex. Talked to them. Picked their brains. Told them (truthfully, I meant it) that if someone showed up looking at my unit but wanted something bigger, I'd send them over to the agent's property; asked them to consider doing the same for me. Note: I didn't offer them a finder's fee: A real estate broker can only accept payment through his/her broker, not from anyone else. But, in case they could figure out a way, I did mention that I've offered a $1,000 finder's fee. Nothing. I've tried CraigsList, both under "Real Estate for Sale" and "Apartments for Rent."

 

I've tried adjusting the option amount. Started out "Only 4% moves you in!" That was about $10,000. People said that was too high. So I dropped it--tried "$4,995 Moves You In." Nothing. Tried: "$4,995 Moves You In. Includes First Month's Rent." Nothing. Tried "3 Payments Moves You In." Nothing. Tried: "$3,995 Moves You In." Nothing. Tried "$3,995 Moves You In. First Month's Rent Free." Nothing. A couple of people told me that was still too high, and a real estate agent I talked to said people expect nearly 100% financing. OK. Well....So I tried "$99 Moves You In." (I had mixed feelings about that. I wanted something to work, but I sure as heck wanted more than $99.) I don't think I got a single response from that. A lease-option with no option fee and market rent with a 20% rent credit didn't produce any response. So, when you speak at Real Estate CNG, please don't suggest that adjusting an option fee is the solution.

 

Well, I figured, how about adjusting the rent and option credit? (I was trying this approach at the same time as adjusting the option fee.) I'd originally tried setting the rent at $1,545--slightly above market rent but with a $250 per month option credit. Nothing. Dropped it to $1,395 with a $100 option credit. Nothing. Then, remembering what one guru suggested, tried it the other way--listing it as a lower rent plus option fee. So I tried $1,195 plus $200 option fee. Now I started getting calls from people who wanted to rent at $1,195 but didn't want to buy. I plunged ahead--$1,095 with an option fee. More calls. These were from people who wanted to rent, didn't want to buy so didn't want to pay any option fee, and sometimes didn't even have the equivalent of first month's rent and security deposit. OK....

 

Well, what about different pitches? All the gurus said the "Rent-to-Own. No Bank Qualifying. Poor Credit OK" ads would have my phone ringing off the hook. No, my phone was as quite as a church mouse. So I changed the headings. Tried "Achieve the American Dream." You know, promoting home ownership. Nothing. For people who might have pets and were getting turned down elsewhere: "Rent-to-Own. 2BR/2BA Condo. Poor Credit & Pets OK!" Nothing. Tried "First Month's Rent Free. Rent-to-Own. Free Utilities." The word 'free' is supposed to be magic. Not here. The property is about half an hour away from George Mason University. So I tried, "George Mason Bound? Off-Campus Investment Option." Nothing. So, Messrs. Schreffler and Cass, please don't tell me about the lure of "free" or "pets OK" or "no bank qualifying" or "achieve the American dream." I've tried really being creative.

 

One guru said in her book that she'd had a friend who'd offered free pizza for on-time payments. I tried that: "Rent-to-Own 2 BR/2BA Condo. Poor Credit & Pets OK...FREE PIZZA!" The deal: A free, large pizza weekly from Domino's. Nothing. Then, I figured, with the crisis in Iraq, the Middle East, problems with the Alaska pipeline, and gas above $3.00 a gallon, I'd offer free gas: "Rent-to-Own 2 BR/2BA Condo. FREE GAS FOR YOUR CAR." The deal was, for $1,595, I'd pay for their gas using the figures at www.fueleconomy.gov. That was a value of from $88 to over $230 a month, depending on the type of car. And I promised that if gas prices rose, I'd pay more. Nothing. The condo is within walking distance of an elementary, intermediate, and high school...all in Fairfax County, with one of the best school systems in the country. So one ad was headlined: "MOVE IN BEFORE SCHOOL BEGINS**Rent-to-Own**1st Month FREE**OPEN SUNDAY." Nothing. Hoping maybe this was just a Northern Virginia phenomenon, it occurred to me that some people might be moving to this area who'd want a rent-to-own. (I have received phone calls from people in Pittsburgh, Chicago, and Atlanta who are moving to the DC area. But, for some legitimate reasons, my condo doesn't meet their needs.) So I placed a listing on the Baltimore CraigsList: "Moving to Virginia? Rent-to-Own 2 BD/2 BA Reston Condo." Nothing. Growing frustrated, I posted another: "Rent-to-Own 2 BR/2BA Condo. No Bank Qualifying! Make Us An Offer!" I said I was flexible on rent, rent credits, price, everything. I invited the CraigsList browsers to make me an offer that they'd designed. Nothing.

 

So, Messrs. Schreffler and Cass, you got anything more creative than that? I've held open houses virtually every Sunday. I get anywhere from 2 to 5 people/couples. A couple are legit. Some just want to rent. Some are just looking. But a lot of people were asking for something mid-week. (I guess the Saturday night partying interferes with the Sunday open houses.) I tried a Wednesday open house this week. No one showed up. Some of the gurus advise not to have open houses; rather, schedule appointments (but all at the same time). I've tried that, and most people still don't show up. I've got a website with the information (changed as appropriate from day to day) online and a downloadable flier. Most of my postings on CraigsList include photos...though I tried some postings deliberately without photos to see what effect that'd have. As you can guess: Nothing. I've posted it on Rent.com. I've gotten a call or two from that, but when the last one realized the unit was on the first floor ("sliding glass doors open from your living room to your private patio and manicured common area lawn beyond" hadn't clued her in), she declined.

 

I've searched out posters on CraigsList who say they're looking to rent or own. Gosh, they sound so desperate when they post. They cry out for anything under, say, $1,500 in the Reston area. But maybe they have poor credit, or pets, or need something RIGHT AWAY. Can ANYBODY PLEASE HELP ME, they lament. You guessed it. Nothing. I've posted the listing here online a couple of times with a $1,000 finder's fee. Nothing. I received an e-mail from someone who saw my posting on CraigsList and said he had 174 (or was it 147? Who knows?) tenant/buyers just aching for a place of their own. His deal was that he wanted the first $3,000 in option fees from the tenant/buyer. I'd get anything over that, plus I'd get the full rent, plus a tenant/buyer who might buy at the end of the lease. OK by me. I e-mailed him all the info and documents he asked for. Nothing. I e-mailed him the documents a second time. Still nothing.

 

 

 

Well, I must say, it does seem like you are having a really brutal time with this situation. At the same time, the techniques and methods you are attempting to use to remedy the situation are working with other properties, in other situations. So, one must consider, what if anything here is different. By far the most puzzling thing is that you are, if I understand the post properly, putting out advertising without great specificity (option exercise pricing, initial deposit issues, etc, etc) and this would seem to eliminate the most obvious barriers to a prospective caller.

I am assuming that you mean to indicate that it is not that people are calling, and not acting, but rather that they are simply not calling at all. Correct me if I am wrong about that as it is a primary assumption. If this is in fact the case, the only thing really left would be the location as a negative, but even this is rendered non-specifically if I read this correctly.

What is the price that you are offering for the option to purchase component of the transaction?

I am truly puzzled on this note, although I do have one suggestion.

There are any number of services with whom you can contract for 800 phone line, recorded information hotlines. The general idea here is that people can call in to you advertised number(s) and hear free 24 hour recording(s) about the property(s) available. The software will allow you to be notified every time someone calls, the caller is given the option of hearing your descriptive message, getting a fax on demand sent to them, or hitting "0" and speaking to you instantly, and in person. The number, address and name associated with the incoming number is captured so you can return their call, even if they did not leave a message (there are no issues with do not call problems as they first contacted YOU). In addition, the system will email, page and text message you and as many other people as you may designate with the same caller information as soon as the call comes in. As such, you can call them immediately back and attempt to engage them as a prospective buyer/renter/seller, etc., etc. This is the only thing that really comes to mind right off the bat.

I am not sure what it is, but I am sure there is SOME reason this is not working, it is perplexing, however. I doubt this is much help but I certainly encourage you to keep pushing. Have you thought about putting it on the MRIS system yet? You can pay a realtor a reasonable commission to market and lease the property. Perhaps the exposure would garner some better results.

SOLUTIONS 3D RESPONSE TO DON SCHREFFLER:

Thank you for responding to my post. Addressing/clarifying a few of your points:

"...the techniques and methods you are attempting to use to remedy the situation are working with other properties, in other situations."
WITH ALL DUE RESPECT, PLEASE CONVINCE ME OF THAT. I'VE SPOKEN TO A COUPLE OF OTHER INVESTORS WITH NORTHERN VIRGINIA PROPERTIES WHO ARE ACTIVELY MARKETING RENT-TO-OWNS (MAYBE NOT AS ACTIVELY AS ME, BUT DOING MANY OF THE "RIGHT" THINGS) AND GETTING NO RESPONSE.

So, one must consider, what if anything here is different.
TRUE. AND I'M WONDERING WHETHER IT'S NORTHERN VIRGINIA...A DOWN MARKET, OR WHAT.

By far the most puzzling thing is that you are, if I understand the post properly, putting out advertising without great specificity (option exercise pricing, initial deposit issues, etc, etc) and this would seem to eliminate the most obvious barriers to a prospective caller.
SOME OF THE ADS HAVE BEEN VERY SPECIFIC, OTHERS VERY GENERAL. I'VE BEEN TRYING TO TEST BOTH OPTIONS.

I am assuming that you mean to indicate that it is not that people are calling, and not acting, but rather that they are simply not calling at all. Correct me if I am wrong about that as it is a primary assumption.
THAT'S THE PROBLEM. ALMOST NO ONE IS CALLING. SOME DO CALL OR E-MAIL. OF THOSE, PERHAPS HALF JUST WANT TO RENT. THAT'S MORE OFTEN THE CASE WHEN THE PITCH IS "$1,195 PLUS $300 OPTION FEE." BUT IT'S ALSO BEEN THE CASE IN $1,545...$250 EACH MONTH CREDITED TOWARD PURCHASE PRICE." OF THE OTHERS, SOME HAVE NO OPTION FEE, OR ALMOST NO AVAILABLE CASH. SOME DON'T UNDERSTAND THE CONCEPT OF LEASE-OPTION (OR RENT-TO-OWN). SOME SAY THEY UNDERSTAND, SPEND LOTS OF TIME ON THE PHONE, THEN STILL ANNOUNCE THAT THEY'D LIKE TO RENT FOR, MAYBE, 6 MONTHS AND THEN DECIDE WHETHER THEY WANT TO BUY.

If this is in fact the case, the only thing really left would be the location as a negative, but even this is rendered non-specifically if I read this correctly.
FRANKLY, THE LOCATION--AS I NOTED IN MY ORIGINAL POST--IS OK, BUT NOT GREAT. THE RESIDENTS ARE ETHNICALLY DIVERSE AND A MIX OF LOW-MODERATE TO MODERATE INCOME. IT'S NOT UPSCALE. BUT I'M NOT PROMOTING IT AS UPSCALE, EITHER. IN FACT, ACCORDING TO MOST OF THE "GURUS," THIS PROPERTY AND THIS LOCATION OUGHT TO BE IDEAL FOR MANY RENT-TO-OWN CANDIDATES. BUT THE PEOPLE WHO LIVE THERE BY AND LARGE DO HAVE JOBS, INCLUDING SOME DECENT JOBS. THEY DRIVE DECENT CARS, THEY HAVE FAMILIES. THEY'RE GOOD, SOLID PEOPLE. MOST OF THEM ARE WORKING THEIR WAY UP. BUT, RETURNING TO YOUR POINT, MANY OF MY POSTINGS DO GIVE THE SPECIFIC ADDRESS, WHICH MAY BE MEANINGFUL TO THOSE VERY FAMILIAR WITH RESTON BUT NOT SO FOR THOSE WHO AREN'T AS FAMILIAR.

What is the price that you are offering for the option to purchase component of the transaction?
I'D STARTED AT $275,000 WHEN UNITS IN THERE WERE SELLING FOR ABOUT $255,000. (THE GURUS GENERALLY ADVISE TO PUT A BIT OF A PREMIUM ON THE CURRENT PRICE. WENDY PATTON, FOR EXAMPLE, SAYS ABOUT 10%...OTHERS ABOUT THE SAME. THE RATIONALE: IF THE RENT-TO-OWN CANDIDATES WERE IN A POSITION TO BUY TODAY, THEY WOULD; THIS IS A MODEST PREMIUM TO ALLOW SOMEONE WITH POOR CREDIT TO BUY A HOUSE THEY OTHERWISE COULDN'T.) I'VE DROPPED MY PRICE AS TIME HAS PASSED AND AS OTHER PROPERTIES HAVE BEEN LISTED FOR LESS. AND I'VE TRIED SOME POSTINGS THAT HAVEN'T MENTIONED PRICE AT ALL, OR SAID THAT THE PRICE WOULD BE SET WHEN WE SIGNED THE LEASE-OPTION. THAT HASN'T WORKED ANY BETTER THAN LISTING A PRICE.

I am truly puzzled on this note, although I do have one suggestion.

There are any number of services with whom you can contract for 800 phone line, recorded information hotlines. The general idea here is that people can call in to you advertised number(s) and hear free 24 hour recording(s) about the property(s) available. The software will allow you to be notified every time someone calls, the caller is given the option of hearing your descriptive message, getting a fax on demand sent to them, or hitting "0" and speaking to you instantly, and in person. The number, address and name associated with the incoming number is captured so you can return their call, even if they did not leave a message (there are no issues with do not call problems as they first contacted YOU). In addition, the system will email, page and text message you and as many other people as you may designate with the same caller information as soon as the call comes in. As such, you can call them immediately back and attempt to engage them as a prospective buyer/renter/seller, etc., etc. This is the only thing that really comes to mind right off the bat.
AH, MR. SCHREFFLER. A GOOD SUGGESTION. GUESS WHAT? YOU GUESS IT! I DO HAVE AN 800 PHONE LINE [WELL, AN 866 PHONE LINE] WITH RECORDED INFORMATION. NOT ONLY THAT, BUT I SPENT SOME TIME COMING UP WITH A CUSTOM, EASY-TO-REMEMBER, POSITIVE NUMBER: 866-HOME-WE-GO. NICE? I THOUGHT SO. AND IT'S THROUGH FREEDOM VOICE, SO I AM NOTIFIED EVERY TIME SOMEONE CALLS. I HAVE THEIR TOP-OF-THE LINE PROGRAM, WITH ALL THE BELLS AND WHISTLES. PEOPLE CAN FAX ME AT THE NUMBER; I CAN LOG IN AND INSTANTLY CHANGE THE FORWARDING NUMBERS, ETC. AND I HAVE IT SET UP SO THE ACTUAL MESSAGES (WHEN SOMEONE LEAVES A MESSAGE) ARE SENT TO ME AND TO MY VIRTUAL ASSISTANT.

OH, DID I MENTION I HAVE A VIRTUAL ASSISTANT? IF SOMEONE WANTS TO SPEAK TO A REAL, LIVE PERSON, THEY CAN PRESS ANY OF A COUPLE OF EXTENSIONS AND IT'LL RING THROUGH TO KATHY (MY VA) BETWEEN THE HOURS OF 9 AM AND 5 PM. OUTSIDE OF THOSE HOURS, OR WHEN KATHY DOESN'T PICK UP IN 3 RINGS, IT ROLLS OVER AND RINGS ON MY CELL PHONE. SO (UNLESS KATHY AND I ARE BOTH UNAVAILABLE), THERE'S A LIVE PERSON FOR CALLERS TO TALK TO 13 HOURS A DAY, 7 DAYS A WEEK.

I am not sure what it is, but I am sure there is SOME reason this is not working, it is perplexing, however.
AGREED. HOWEVER, I'M A RELATIVE NEWBIE. I EXPECT GURUS TO KNOW MORE THAN I DO.

I doubt this is much help but I certainly encourage you to keep pushing. Have you thought about putting it on the MRIS system yet? You can pay a realtor a reasonable commission to market and lease the property. Perhaps the exposure would garner some better results.
THAT APPEARS TO BE THE NEXT STEP. OH, DID I MENTION THAT I JUST TOOK THE VIRGINIA STUDY COURSE TO BECOME A REAL ESTATE AGENT, PASSED IT, TOOK THE LICENSING EXAM, AND PASSED IT? IN A FEW WEEKS, MAYBE A MONTH OR SO, I'LL BE AFFILIATED WITH A BROKER. I MAY OR MAY NOT HANDLE THIS PROPERTY MYSELF. WE'LL SEE.

I DO APPRECIATE YOU RESPONDING TO MY POSTING. BUT MY QUESTION TO YOU REMAINS: DO THE TECHNIQUES THAT YOU'LL ADDRESS IN MONDAY'S SESSION STILL WORK IN NORTHERN VIRGINIA IN TODAY'S MARKET? IF THEY DO, PLEASE PROVIDE EVIDENCE.

AND MY CHALLENGE STANDS: FIND ME AN ACCEPTABLE TENANT-BUYER, AND I'LL PAY YOU $1,000...AND, AT MY OWN EXPENSE, GO TO WHEREVER YOU'RE SPEAKING OR APPEARING ANYWHERE ON THE EAST COAST, PRESENT YOU WITH A SYMBOLIC CHECK OR ACTUAL CASH--YOUR CHOICE--AND PROVIDE YOU A LIVE, GLOWING TESTIMONIAL.

THANKS.

DON TEPPER

During his presentation, Schreffler said he didn't really consider himself a lease-option guru...that his strengths are more with lending and some other investment techniques.

Ultimately, Schreffler wasn't able to help me find a tenant-buyer. However, based on his willingness to provide feedback...his promptness in doing so...the solid nature and detail of his suggestions, I give him a grade of...
B+

CASS RESPONSE

Cass did not post an online response, nor did he respond to me personally. He spoke as scheduled on September 11. He failed to respond to any of my specific points. Instead, he described in general terms his program of bringing real estate agents, investors, purchasers, and lenders together. (And he ended with a pitch for his network marketing program and another presentation at which he promised the details would be revealed.)

During the course of his September 11 presentation Cass made such statements as: "Housing prices are skyrocketing and are quickly becoming out of reach for first time home buyers" and "The longer they wait to buy, the further prices get out of their reach." He said, "The market is massive for what we're doing" and "People want to get into houses." He suggested, "Want to find a lease-option deal? Stand in front of a supermarket and out of 10 people, three are potential customers." And he repeated: "There is a massive market waiting for us to find a way to help them out."

Cass wasn't able to help me find a tenant-buyer. Based on his lack of online feedback...his failure to address any of my points during his presentation or during the Q&A afterward, his claims that "housing prices are skyrocketing," the use of the forum (and our couple of hours) to promote a network marketing program, the details of which he wouldn't supply, I give him a grade of...
F

Jeff Beaubien
I posted a summary of my experiences on Lease2Purchase.com, a web site run by Jeff Beaubien. I've bought his materials (they're OK, not great, but very down-to-earth and practice), and he runs a web site and bulletin board. I wasn't specifically challenging him--he doesn't live in this area and doesn't claim any familiarity with it. But I wanted to see if he or anyone else would have suggestions. He responded promptly with general encouragement, and noted that he doesn't consider himself a "guru"--he doesn't do seminars, speaking engagements, or boot camps. He just describes himself as someone who loves real estate and computers. Fair enough. So I can't assign him a grade. But I give him credit for what he does generally, for his prompt response to me, and for taking the problems seriously. Check his site out.