How to explain lease purchases (Creative Financing)

All right, welcome to another Q&A Thursday where myself and Brian O'Neill, High 6 Associate Certified Coach— welcome, Brian.

Hello, nice to see you.

Where Brian and I were on a High 6 weekly call. We do meet with several groups per week with High 6, and it's the only level where we have 2 coaches, and it's Brian and I tag-teaming it. Um, and they're always awesome calls, but in this particular call, a student brought up a couple topics surrounding how to explain lease purchase, how do I gather mortgage information if the seller tells me they don't want to give it to me, all stuff around that. So we're just going to kind of banter about here, Brian, if you're good with that, and we'll see where that brings us. How's that sound?

100%, let's do it.

All right, so let's first talk about, um, and I'll have you go first. Let's first talk about A seller says, what is lease purchase? I think let's start there because then that'll bleed into the mortgage info. And then I'll talk about, with you reminding me, the call that I posted on the script channel, what that means to the audience here.

Yeah, definitely. And look, when you're talking to a seller, that's the question you want them to ask, right? You want them to respond to that. And whether it's, what is that? Or no, or I've never heard of it, you want them to give you the opportunity to explain it. And less is more because you want them— you want the seller to ask another follow-up question, right? You don't want to give a long-winded response because your attention span is is only like 30 seconds for most people. So you want to make sure you keep it short. So when someone says, hey, what's a lease purchase? And I've been talking to them for a couple, 3 minutes and I got their motivation, I'll normally just say, all right, listen, there's a couple things that we do, right? We agree upon a price, we agree upon a length of time, and we agree upon your equity. Like we're trying to maximize your equity here. Okay? As long as you have the ability to wait for your money, I can help you get, I can help you get more. So we would take over your mortgage payments. We would cover taxes, insurance, all responsibilities associated with the house. You have no financial responsibility whatsoever. You can go move on and do the thing you told me that you wanted to do, relocate to Florida or whatever it was. I try to keep it like high level, and that would really be it. And then I would stop. And then, and I have many variations of that, Chris, that I, right, when I explain it, but it's normally very short because I want them to ask me a follow-up question. Well, what's the term? What's the price? What's the blah blah blah? Then they'll ask the follow-up question, and then I'll paint the picture for them. I'll get the details that I want, which is the mortgage. They'll say, "Well, well, what is the term?" I'll say, "Good question." I say, "Well, let me paint a picture for you," and I get this every single time. I've been doing this for the last several years. I get it every time. Let me paint a picture for you. What do you still have left on the loan? They tell me. And what is the month? A motivated seller will tell you every time. Okay. And what's the monthly payment on that? $1,300. Now I have it. Is that per— is that, is that to include taxes and insurance? Yes. So now I have all the data and then I make it real for them and I'll say, okay, all right, if you did sell it, what is it you were hoping to get after it was all said and done? What were you hoping to net? What's the check to you at the closing table, Mr. Seller? They'll tell me that, or they won't. If they're like, oh, I'm not really sure. You never tell them their equity. You tell the— they tell you. And I'll say like, look, if I can get you the $50,000, let's say they say, let's say they say 50 grand. If I can get you the $50,000, what is the maximum amount of time that you'd be willing to wait for it? Then they tell me, right? Whatever they say, it's whatever. So I say, okay, here, here's how it would work. I'll guarantee you the 50 grand. All right? I'll pay the $1,300 every month. And on or before the date, the 60 months that you told me, you'll get the balance of your equity. Your $50,000. We'll lock it in now. That's simply how I do it.

And that works great. I got a bunch of notes here. That works great, especially in a market that's flat or potentially sliding. Or I'll add this caveat: when the press is screaming that it's going to be sliding, which is going on now as of the time of this filming, which helps us a lot. So I wrote down a couple of things, Brian, and I want to say this to the Wicked Smart. Viewers here on YouTube, if that's where you're seeing it. We have— Brian and I and all the coaches and students, we have a script and dialogue channel in our platform. So all the associates and, and 90-day jumpstarters in our program— if you're not familiar with that, you can check the site— but they all hang out on Slack. And there's one channel, scripts and dialogue. So even if Brian and I do a call— I did a call for our team last week, I posted it up there— and I'm going to talk to you about what was in that call because he butted heads a little bit with me on this mortgage stuff, which doesn't happen much at all. to the two of us, Brian, but it does happen to some newer students because maybe the confidence doesn't come through or whatever, right? Right away. So I wrote down a couple things. Um, uh, the equity— when Brian mentioned if you, if you want your equity up front, I love using the word— see what you think of this, Brian— um, most sellers I don't— I deal with, or most homes I buy, or did you need— I just use the word need, uh, because when I say most The homes they buy, the sellers don't need their equity out. They can wait. A lot of people's egos kick in and they'll go, I don't need it either. Like, I'm okay. Like, they don't want to act like they're getting— I'm desperate, I need money, right? So I don't know, do you get that? Do you feel that way?

Yeah, 100%. Look, just a small follow-up on that. Every seller needs their money right away. They all do until you ask them, well, I can't do that, right? I just had a phone call with a seller earlier. She wanted $82,000 and I broke down. I said, I can't do that. Well, I'd be open to waiting. I'd be open to renting for a couple of years. Most people run off the phone, but when you dig a little deeper, you get the real story.

Yeah, it's sort of like, okay, so you remind me of the call last week I did where the guy started out. And by the way, if you're watching this and you're not in our community, just think how cool it is to listen to these live calls. So this was just like last Thursday I posted, but the guy at the beginning of the call, 10,000-foot view, basically said, no, I need my money now. And, you know, he started saying, screw all the realtors and I'm selling it as is. And every— the more he talked The more it screamed, this thing ain't selling conventionally because he's tough to deal with and he hates real estate. Every flag came up for the positive that he's probably gonna need to call us back. Um, and then I, I will say this, if there's equity, Brian, you said that because these deals are great if there's no equity too. It's kind of the same script. There's just so many nuances, right, that, that go into these lease purchase deals. Um, mortgage info, let me address that, Brian, see what you think of this. We'll banter this a little bit. So On this call, I always say it's confidence, but on this call, the guy hit me with it. He said, "I'm not giving you that. That's private." I actually chuckled because it's not private. We all know we can find that on our software. So I laughed, and I forget his first name, but I said, "No, actually, it's very public, but it just would have saved me time. Instead, let me just give you some examples of round numbers of how this works." So I forgot about his his situation. His sales price, let's say, was five something. I and I just used a generic example. Anyone can do this. So let's just say, Mr. Seller, your house is going for $500,000 and we agreed that's okay. You owed $300,000. I'm locking in your $200,000. That's it. It's round numbers. Everybody can get that. Is that kind of what you do if they, if they balk, Brian, or if you had to pivot?

Yeah, I probably wouldn't. I might chuckle as well, but I would just say, hey, that's okay. I don't need it. I can just give you an example. Like, you just— a lot of us get hung up. A lot of the, a lot of the associates are— a lot of non-associates, people who are calling, so they get hung up on getting told no. It's like you want them to object.

Yep.

You know what, it's okay, just move on. They don't want to tell you, that's fine. I don't need it right now. We'll get to that later.

Yeah. And actually, I'm not big on the whole like trying to be in sync and rapport and all that, but it does directly and indirectly sort of allow you to mirror and match them. Like, okay, fine, you move on. You're not getting thrown off by it. You and I both critique calls. If a new viewer doesn't know what that means, so students send us live calls and we critique their calls so they can go put that in action, do another one to us, and Put that in action and throw another call at us and we critique it. And I do hear some sellers— I did one this morning, Paul, for one of our, uh, uh, Brian, for one of our students, Paul. And I could hear it that you got thrown off. You could actually hear it. So you just need to move on with this stuff, I think.

Totally. Yeah. And that just takes practice and reps. And, you know, again, you know, we put— I put stuff in that scripts and dialogue channel all the time. Even sometimes I just have a thought, like a 1-minute thought, like, hey, I'm listening to calls. I'll put it in there like, hey, Guys, gals, say this instead of that, right? And it helps the community.

Yeah, it's like a built-in training. You said one more thing I want to comment on. We'll see if we left anything on the table. And that is, you asked them, uh, what they thought they would net. I can't tell you how many deals we've done without one, um, answer back or combating what the seller says, and they drop their price dramatically because they're on for X. In most sellers' brains, they built in X plus negotiating inspections and all this stuff, and they have a realistic lower number. What if someone said to you, Brian, on the other hand, you see the house is on for $300,000, and in your head you go, okay, the math with a commission, without even figuring sales cost, uh, sales, uh, transfer tax or anything, they give you a number that you know they wouldn't have never— they never ever would have netted. What did you do? In other words, say it's $300,000, it's 5% commission, that's $15,000, right? And they say to you, well, I was going to get $285,000. Well, no. So how do you, how do you answer that?

Yeah, I would normally just go right into that and try to educate them. Because again, a lot of the sellers don't understand what the closing costs are, what they would actually net. So I just use it as an opportunity to educate them. What would you, what would you have paid your realtor? Or what were your closing costs? A lot of people don't know. And so I just use it as an opportunity to kind of educate them further. And, you know, usually it flows from there. I know, I don't know, I don't combat the number. Like, I'm asking them because I want them to speak it. A lot of sellers don't know. Some do. Some know the number to the penny. I've had sellers to the penny give me like cents, like, oh, 4 cents.

Yeah.

Others, they have no clue. It's just to get the conversation going.

Get the conversation going. And if they do have no clue and you just very nonchalant, professionally go at it, you sort of become the authority instantly and just gave them a free tidbit whether you talk to them ever again or not. And they, I think they respect that. Wouldn't you think?

They do. And sometimes I'll just have 'em think about it too. If they don't know, you know, if, if they don't know the answer, a lot of the times us as investors, we want to kind of force that on them. Well, your equity is this. You, you never want to tell a seller what their equity is. You want them to tell you what it is because then you lose control. Right. I just like the woman I spoke to earlier before we jumped on here, she knew what her net was. She's like, I was hoping to get this, this range within like $5,000. Right. And then I didn't have to, I didn't even really have to ask her that.

She just kind of told me.

Yeah. And now it's just a matter of, okay, what's the timing of it? How long can you wait for it?

It's awesome. What, anything else we're leaving on the table for this Q&A and/or we're gonna do obviously some training on this inside of our, our internal platform. So anything else we're leaving out on the table here that could help these guys get to more sellers?

Um, come to the event.

Well, okay. Uh, shameless plug. Yeah. So no matter when you're seeing this, we do 2 live events a year, one usually end of March, one usually mid-September. Those websites you can just go to. I don't know when you're seeing this, so go to qlslive.com or and/or wickedsmartsummit.com and you'll find out what's up and coming depending on when you're seeing this. Brian, appreciate it, buddy. Any last-minute thoughts, tidbits other than the event? Anything to put them in empowerment?

Yeah, I just think the biggest thing with sellers when you're on your calls is you don't necessarily— just keep your responses short, keep your explanations short and brief. A lot of us feel the need to get long-winded because it relaxes us because we're talking. But I was just on a call with a seller before this. I'd mentioned like 6 times already. Listen to that call. I probably asked her maybe 6 or 7 questions. She was talking the whole time. Like, that's it. That's, that's all you got to do. Like, get to get them, get them speaking.

And here's a tidbit there. Then when they ask us a question, you and I are big on this, I know. And that is answer the damn question and then be quiet and move on like it's nothing. It's no big deal. I answer that, moving on versus I got to give them a seminar.

Totally. And I just moved it to the next call. I said, hey, look, I'll explain this to you. I'll send you some information. And I booked a follow-up call, specific day and time for this week. Like, it's a process. You're not going to buy their house on the first call. It's their home, right? So you got to move them along.

Yep, follow-up's key. All right, I, I think we could go on and on as if this was a High 6 Mastermind call, but it's not, and we're gonna wrap it up with that. Uh, if you guys want to get some sort of free advice before coming to any event, we do get together every Thursday at 4 o'clock for the weekly Wicked Smart sit-down, with very few exceptions unless it's a holiday. It's always the coaches, so you're going to meet Brian there, and it's Uh, sometimes a guest speaker, but you can always bring deals, bring questions, bring script challenges, bring— I, I stumbled this week and here's why. Bring your challenges. We want to fix them. We want to help you fix them on this Wicked Smart Sit Down. Um, you can go to the website at any time and check that out. Just go to smartrealestatecoach.com/events and you'll check out when those are. But every Thursday, 4 o'clock Eastern Standard Time. Brian, thanks, buddy. Appreciate you as always.

I feel like I'll see you shortly.

I'm sure we will.