The Fastest Lease/Purchase Ever

The story of Al and Dolores Maas ranks as one of our most uplifting lease/purchase stories ever. From all our years of experience no story better exemplifies how the absolute uniqueness of our terms are perceived (and appreciated) by lease/purchase candidates. No story better stresses our philosophy that we’re selling “terms” first and the “actual physical property” a distant second. The right family recognizes this. These target families in middle-income neighborhoods are unable to purchase today, yet they benefit from finding a “fair” lease/purchase that allows them to live in the house today and purchase tomorrow.

We purchased a post-foreclosure that needed nothing in the way of repairs or improvements. Even the carpet was in acceptable condition. Because the house required nothing, we placed the ad before our closing date to generate advance response. We got sufficient response from the first weekend, so we showed the property before our scheduled closing date. We were able to because we had access to the property and we knew the REO agent. We didn’t anticipate any issues or delays to our scheduled closing.

Generally, we call all families that respond to our ad both the day before and the morning of our scheduled showing and set an appointment. We usually spend 15 to 20 minutes qualifying and prepping each lease/purchase candidate for the showing. This is discussed in detail in Chapter 12 of Buy Low, Rent Smart, Sell High, “Finding the Right Lease/Purchasers.” The key point to understand is that if we perform our phone work with proper due diligence, the lease/purchase candidate will be familiar with our program and excited about the opportunity before even walking in the door.

Sundays are our preferred day to show. We check the voicemail hourly on the day of the showing, because it’s generally a high volume day for calls. Mr. Maas, a potential lease/purchaser, happened to call minutes before Andy arrived at the house for the showing, and they connected on their cell phones. Because other lease/purchase candidates would soon enter the house any moment, Andy was unable to spend time qualifying and prepping Mr. Maas as we normally do. Mr. Maas explained that he was in the general vicinity and that he was seeking a lease/purchase. Andy had just enough time to give him directions to the house and let him know he would wait for him before leaving for the day.

Andy showed the house to four families as scheduled, and as the last family was leaving the Maas family pulled up in their minivan. Andy recalls his surprise as he noticed Mr. Maas couldn’t have been more than 25 years old, but he already had four children: a stepdaughter and three natural children with Dolores. Later we learned that having so many children was the basis for the Maas’s credit problems—and the reason they were a lease/purchase candidate family. He and his wife had married young, and their needs got ahead of their income capabilities. Mr. Maas had solid employment, and he and his wife were in the process of cleaning up the credit mistakes sometimes associated with youth.

What followed proved to be the most amazing two minutes of our real estate career. The Maas family walked up to the front door and Andy came out to greet them. Dolores Maas and the Maas children went around, under, and over Andy as they moved through the front doorway with excitement and eagerness. Andy laughed as he heard the kids behind yelling and already staking their claims on which bedroom each of them wanted.

Mr. Maas stood in the doorway and smiled at his family’s exuberance. Andy greeted him warmly and handed him one of our flyers, which displays features of the house but more importantly the key terms and conditions of our lease/purchase agreement. Mr. Maas studied the flyer, looked up at Andy, then glanced down at the flyer again. Finally, he looked up at Andy and said, “We’ll take it!”

Andy was at a complete loss for how to handle this situation. After some stuttering, he mustered, “Don’t you want to look at the house first?” Mr. Maas said our terms were good enough for him and his family and unlike anything he had seen during his house search. He joked that listening to Dolores, Stephany, Jennifer, Kristie, and Samantha, he had no doubt that they liked the house. Andy calmly and politely explained to Mr. Maas that we have a process, and we must select him (not the other way around). We would be happy to consider selecting his family, but he had to first fill out a lease/purchase application, which he eagerly did.

The Maas family proved to be a perfect fit for our program. Interestingly, we almost lost this opportunity due to a technicality. Normally we take two to four business days to select the right family, then set the move in date within 15 to 30 days after the contract is signed. Mr. Maas wanted to sign the contract immediately, which brought up a comical and unanticipated problem. Legally, we couldn’t sign a contract to a house that we didn’t yet own (the closing date was still two days away). We explained the situation to Mr. Maas. He was willing to take the “risk” and wait to sign the contract after we closed on our purchase.

What we learned later explained Mr. Maas’s eagerness to lease/purchase a house he didn’t even preview. The Maas family had signed an option on a “typical” lease/purchase agreement that they had to commit to on the Tuesday after our Sunday showing. (Buy Low, Rent Smart, Sell High compares in detail our lease/purchase program with more common variations offered by other investors on page 109.) After seeing our program, he wanted it locked up before he had to commit to the other lease purchase. Mr. Maas explained that with the other program, he had to come up with $6,000 up front, and $6,000 more after six months, then had only one year to purchase. If he didn’t purchase within the first year, he’d forfeit the entire $12,000 and the landlord had no obligation to extend the purchase option.

It’s unlikely Mr. Maas could have found the money to make a purchase under the other agreement and would have lost $12,000 in the process. With us, the Maas family exercised its purchase option during the middle of the second year of our lease/purchase agreement.

During lectures and speaking engagements, we’ve often told this story and watched as the audience listened with disbelief. Most families indeed want to preview the house before making a commitment, but without a doubt, it’s the strength and fairness of the lease/purchase terms that reels in the right family. Make your lease/purchase terms fair and you will attract a quality family, have few landlording issues, and more time to grow your real estate portfolio.

Regular Riches Tip: If you select lease/purchase as your preferred investment model, most serious lease/purchasers view the physical attributes of the property a distant second to the lease/purchase terms you offer. This is because you’re not just offering them a place to live; you’re also providing what the lease/purchase agreement represents: a vital element in their plans to reestablish their credit standing and financial stability.