My partner and I just put a new rent to own tenant in a property we recently picked up. And the way to fill these properties has dramatically changed over the last couple of years. When the market was blazing hot you could pick up a property, not make a single change to it and you had people begging you to let them do a rent to own on it.
In Baltimore, MD where I do deals, I could offer properties that needed a lot of work, and tenants didn’t care and were more than happy to do the work themselves.
However, when the market slowed down that all changed.
I first realized this the hard way. I had a property in Stafford, VA that needed carpet. Now when the market was hot, I never replaced the carpet and let the tenants take care of it themselves. But when the tenants were walking through the Stafford property they all mentioned how they loved the house, but didn’t like the carpet. Finally, after about three weeks I got the clue (after hearing multiple people say this) and I ended up putting in new carpet. The house rented out one week later.
Well, when my partner and I picked up this latest deal it needed new carpet and paint. We didn’t hesitate at all to get it in top notch condition and it quickly got rented out. If we would have waited, it could have sat vacant for several weeks or months. But part of being a successful investor is paying attention to your market and adapting to this market.
For now, tenants want the houses in turkey, perfect condition.
And this is exactly what I will give them. However, I will keep an eye on things and see if they change and I can go back to having my tenants upgrade the property themselves.
By the way, one thing that has not changed is how to market the houses when trying to fill lease option properties. The methods that work best are placing classified ads in the newspaper, putting signs on the property and on side streets and placing ads on Craigslist.
We ended up filling this particular property via directional signs and signs in the front yard. There are still a ton of tenants out there who want to do a rent to own (the phone was ringing off the hook) so keep doing lease option deals, just make sure the properties are in good condition.