How Lease Options Work

Mike Hambright (00:01.56)
Hey everybody, welcome back to the show. Today I’m here with the one and only John Jackson, the king of lease options and the king of some other stuff too. But we’re not going to get into that right now. This is going to be probably a little more entertaining show than what you guys are used to with us. But we’re going to talk about lease options with John Jackson today. So John, welcome to the show. Mike, I’m so excited to be here, Good to see you. It’s great to be here. had to catch an early flight to come out here to Carrollton freaking Texas. But whatever, I made it.

Excited to see you, Yeah. Glad you’re here. Yeah, man. So lease options, Well, before we jump into that, I’ve known you for a long time. You’ve always been, I think, earlier today. I did a show earlier today, too, and we referred to you as the most sarcastic person that I’ve ever known. And so you’ve got to be up there. You probably don’t know anybody that’s more sarcastic than yourself, do you? Well, some people call me the funniest guy in real estate. Really? Yeah. Is that what you call yourself? That’s what I call myself. OK. Wait, who called me the most sarcastic person? I did.

Wait, how did I come up in an interview? Well, because I said, I asked the last guest, do you know John Jackson? And he said, no. Who was the last guest? I’m not going to tell you, because he doesn’t even know you. Well, You don’t know him either. Doesn’t matter. How close was he to this mic? Yeah, you’re You’re good. So who are you? Tell us about your background and real estate and our common, you know, we still have this common theme of we both used to work at Radio Shack.

Did you forget about that? Yes, yes. Not at the same time. No. funny story is Mike and I both worked for Tandy Corporation years ago. You worked in an office. I worked in the repair center. That was years ago. Yeah. Many years ago. 2000 or before 2000. I was there 2003 to 2006. Yeah. So they had posters of you up. It’s like if you see this man, like run.

You know what? Radio Shack’s the only job I got fired from. then I got to. Yeah. Now everybody got 35,000 people got fired. I got fired because I go. Anyway, this whole thing. All right. So yes, John Jackson, I’ve done lease options since 2003. So my company leasing to buy in 2003. And we focus on lease options. And we’ve done that for now for 22 years.

Mike Hambright (02:27.606)
We do other things as well some seller finance and this and that but what I’m known for is lease options in the real estate specifically within single-family houses Yeah, and what we’re doing Mike what we do lease options is we help basically helping sellers that can’t sell and buyers that can’t Put them together and boom. Yeah And the little and and I guess the unique twist is most people who would say that lease options are illegal in Texas but and most people just don’t do them or they

probably do them illegally and they don’t know. But you’ve kind of figured out how to structure that. So maybe talk about how they’re done in Texas compared to what is a lease option first, and then talk about what kind of makes it illegal in Texas and how you kind of get around that. So a lease option is simply a lease with the option to purchase a property to set price before the option expires. So I tell people to put in a context to make it understandable.

If someone’s ever leased a car, a BMW, Cadillac, Mercedes, whatever, they actually had a lease option, right? They’re making, they put a little money down, whatever, making their payments. They have the option to buy that car before that option expires. So we do the same thing, except instead of a Cadillac or BMW, it’s a four or $500,000 house. And so that’s what we do. With the sellers we work with, the sellers we work with are

needing a plan B. And I’m very honest with sellers, and I’m very transparent. go, look, we’re plan B. I’m a marketing company, right? That’s what I do. I’m a marketing company. And so I say, you’ll plan A, stick it sign the yard and five days you have five offers. Well, those days are over as of 2021. So I’m plan B. I get your full price, no commission, cash flow, get your cash out within a year. And so they love it. We package that up, boom, boom, market the lease option. Here comes the buyer. They pay us a

an option fee and boom, put them together. And that’s what we do. And on the Texas side, what has, guess, I know there’s a story behind how they became illegal in Texas, which I think also centers around Fort Worth from what I call the story, which is where Radio Shack’s at handy, but, or was.

Mike Hambright (04:48.652)
But then that was basically just government probably overreach like swinging the pendulum too far one way. was take no prisoners kind of thing. And I don’t want to take up too much time on Texas, but it goes back to contract for deed. Let me back up. A lot of confusion about lease options in Texas has to do with contract for deed. One, most people don’t know the difference, which is a huge difference.

Contract for Deed was very popular in Texas, especially because of our Hispanic population. And then in 2000, when the tornado took out downtown Fort Worth, it took out a small area of houses that were sold Contract for Deed. The tornado hit, the two knucklehead investors that had sold them Contract for Deed, they were collecting insurance premium, but they weren’t paying it.

So now these people have no money, no house. anyway, so they changed contract for deed law, which is Title II, Chapter V, Texas Property Code. Anyway, so then people stopped doing contract for deed because the rules were so onerous on the seller. Well in 2005, they passed the law about lease options.

Part of the confusion is, nobody read the law, to… Well, you have to pass it to read it, but you don’t have read it until after you pass it. That’s what I That’s what some lady from California said. We got to pass it before we know what’s in it. But part of the confusion about Texas is the requirements for lease option are intertwined with contract for deed, meaning they’re within the same part of the property code. So you really have to sit there and pull it apart. It’s, OK, what’s contract for deed? What’s lease option?

The property code even says, these five, six sections apply to release option. These sections don’t. So, okay, you’ve got to pull that apart. Yeah. So, which I did because this is my business, right? Right. So, I did that and fortunately, because I’ve used multiple different attorneys, but one of the attorneys I use, he’s retired now, is Charles Newman. Charles Newman wrote the majority of Talented Chapter 5 back in the day.

Mike Hambright (07:15.938)
So all the contract for deed stuff, that was Charles Newman. Well, he was my attorney a little bit later on. anyway, so with Texas, yes, lease options are totally legal. You cannot do a sandwich lease option in Texas, which is where you’re sandwiched between the seller and the buyer. But you can do lease options. You have to have certain verbiage in the contracts, certain disclosures with the buyer. It’s about protecting the buyer.

Yeah, so you can totally do them. You don’t want to do them over three years. Otherwise, becomes contract for deed. That’s the big thing is the term. Yeah. Right. Yeah. Yeah. And what you’re doing now is essentially you’re just making a market and kind of making almost like an assignment fee on that. That’s what we do. Yeah, it’s an assignment of contract. Yeah. What they pay is go towards our down payment when they go to get financed, but it’s our assignment fee. Yeah, so talk about how you use them in your business. Yeah, so what we do is

We target for sell by owners, expired listings, some for rent by owner, definitely for sell by owner, expired listings. We have a software that’ll text blast them, you know, and then my lady, you know, they reply, my lady gets on the phone, bap, bap, bap, bap. I personally do direct mail to MLS 30DOM, so over 30 days on market, because I’m targeting people that are either trying to sell their house or.

tried, but it didn’t work. And so it makes the conversation super easy. So I just explained to the seller, find out the situation, what’s going on, blah, blah, blah. It’s the easiest conversation you’re ever going to have with a seller. I’m telling you, it’s the easiest conversation. Because you know they want to sell. They just have a name on the sell. they’re like, they need a plan B. And I’m like, hey, I plan B. what’s important to note is that what we do is so easy. The conversation with the seller is so easy.

my students and other people, they’re fascinated to hear me talk to sellers. like, this is not fascinating, because I’m not beating them down. I’m not saying, that the best you can do? How’s that roof looking? I don’t give a shit. Because it’s a nice, beautiful house. I’m just finding out their story. I’m like, well, here’s what we do. I’m playing B. I’m a marketing company, pap, pap. And then I literally send them two emails and then call them next day. And they go, how fast can you find somebody?

Mike Hambright (09:42.254)
All right, I’ll go And from the seller side, what it really means is somebody is buying their house or has the option to buy. do you go out three years, or is it normally like 12 months or No, so we do. So we structure one-year lease options, which has nothing to do with Texas. We’ve always done one-year lease options. The reason for that is the sellers we’re working with, they want to sell. They want to be cashed out. Right. So one year, they can see light at end of the tunnel. Right.

To when the buyers come to us well now They’ve got to be a better buyer. They can’t come to us the 400 FICO score, right? They’ve got to be you know, DTI has got to be solid, know, the credit doesn’t have to be you know 800 but you know, they’re gonna be where I know okay with with credit improvement that we have in place and the lender I know we can get you done in a year. Yeah, and so you help the buyer and they’re close they need they’ve got some Dents and scratches on their credit

and then you connect them with somebody to get their credit approved so that they can exercise that option within a year. Exactly. Yeah. So our lender that we’ve worked with for years, she does the credit improvement. So they come into our program and boom, they’re in the pipeline. They’re kind of on that process. Finish up, clean up a couple of things, and then boom, get some financed. Yeah. So the seller gets full price. They don’t have to negotiate. I’m not beating them down on price.

The buyer gets a house that they just need a little bit of a runway of time to get things in place. And these aren’t all people with necessarily bad credit. could be entrepreneurs. mean, it’s people with a lot of entrepreneurs have, you know, they might be fine from a cashflow perspective, but like a traditional credit check or traditional financing is just a different kind of set of criteria that a traditional lender might look at. I’ve helped countless people that are self-employed.

And well, you how that is. Being self-employed, it’s always easy getting financing, right? It helps to have that runway of time. Yeah. Yeah. Yeah. If you’ve been less than two years, or even if you’re more than two years, a lot of entrepreneurs can write stuff off or whatever. On paper, it looks like you’re not making a lot of money. But the reality is you’re fine. You’re clear worthy. Yeah. Exactly. So yes, we just package up the lease option, market that, get paid an assignment fee. And so.

Mike Hambright (12:07.342)
With what we do, it’s really a great strategy for someone starting off in real estate because I don’t wholesale. I mean, I’ve wholesale before. If it falls in my lap, I’ll wholesale it. But with wholesaling, typically, you’re pulling a list of 10,000 people, the same list that every other wholesaler in your area has, right? Skip tracing them and then whatever, put them into the mojo dialer or whatever.

you’re calling people that are pissed off and angry because they just got 10 of their phone calls before yours, And so I don’t skip trace anybody. I don’t negotiate. I don’t cold call. we’re only talking to sellers that already want to sell. They say, I’m trying to sell or hadn’t sold, right? So it makes it really easy for someone starting off. I tell people, to do what I do, it’s- Because they don’t have to be a motivated seller. mean, the motivation’s already present because they had it-

previously listed and it didn’t sell, right? Yeah, because if you ask a seller, maybe their listing’s expired. Or maybe it’s on the market for three months, four months, whatever, and you’re talking to them, and you ask them, what are you going to do if it doesn’t sell? And you just shut up and see what they say. Most sellers, if they’re pressed, going to say, I guess I’ll just rent it out. Yeah. They’re like, no.

Are you kidding me? You just told me you’re about to move to Memphis, Tennessee, because now you’ve got to this rental, long distance rental. Have you ever been a landlord? Wouldn’t you rather have someone living in the house that’s actually in process of buying it, that’s taking amazing care of it? Well, yeah. That’s what we do. Yeah. And so it seems to me like this strategy, this is a good time to be a plan B, because houses are sitting on the, you know, the truth is a lot of sellers are just,

people have been spoiled because of the last 10 or 15 years. they didn’t really, know, houses just sell in a week or two, right? And now they’re like, my God, it’s been on the market for 30 days. Like, what’s wrong? It’s like, well, this isn’t maybe a more normal market than what you’re used to. Yeah. it’s, so lease options and seller finance, but lease options are a great strategy when the market is soft. So like, just did a post on Facebook this week saying I need someone in Tampa, Florida.

Mike Hambright (14:31.086)
And I posted that because Tampa, as an example, when I looked at Redfin, I don’t remember how many houses were on the market, total MLS. But when I cut that down to, here’s the total number, how many are on the MLS on Redfin in Tampa over 30 days, where the seller’s been sitting there for 30 days. 33,000, I think it’s 33,404. But over 33,000 sellers sitting there.

How are they gonna sell when there’s 33,000 other houses they gotta compete with? I’m like, my God, this is stupid. We could crush it there. So I made a post, I need someone in Tampa, and I’ve got calls this week with people lined up. Because again, when interest rates go up, supply is high, lease option all day long. And what about during a hot mark? mean, let’s just say, know, 20. 2021.

2020, 2021, it slowed down for us in the real estate side, right? Because dumb money was coming in. In any market, when you see a hockey stick, in any market, that’s dumb money coming in. Meaning the market could be moving up and you see a boom, hockey stick, okay, it’s time to get out. It’s dumb money coming in. Well, when that dumb money comes in, yeah, the creative stuff slows down, right? Because sellers can literally,

sick of signing the art, they got people fighting over your house. So it slowed down for us. And I guess it 2021. And then once that popped, man, here it came. Crazy. And do you ever make an offer for folks to owner finance versus a lease option? Because you’ve got one of the things that the person that eventually has to buy is up against is rates that are quite a bit higher now. So they could, in theory.

owner finance or wrap their own note or whatever and keep that cheaper financing in place which you know the on one hand the house is still on their credit on the other hand they’re more likely to actually be able to sell it to somebody with that financing in place that can actually close in a year because they have a three and a half percent interest rate or something. Yeah so we will so our number one thing is the lease option that’s what we’re known for.

Mike Hambright (16:55.97)
But in a lot of cases, we’re talking to sellers, we’ll say, no, here’s what we do with the lease option blah, blah, And we’ll say, well, now, another program we have, which is not a fit for all sellers, is seller finance. This is where you become the bank. You’re actually going to make more money. But it’s over time. And that’s something we can look at. I mean, we start planting those seeds. Right. Particularly in houses that are over $600,000, the buyer pool for seller finance is bigger than lease options.

And so we’ll plant those seeds with them or if it’s out in the country somewhere, you know, if it’s off the beaten path, seller finance. Yeah. Right. It’s going to be hard to find a buyer for lease option. And it’s harder to appraise and all that stuff. Yeah. Yeah. Exactly. So I’ll pitch the seller finance and, you know, put the numbers together for them on that. so because of that, about 10 percent ish, maybe 12 percent of the deals we do are seller finance or

Now we’re finding a seller finance buyer. Right. Yeah. So you talked about a little bit about marketing, like finding leads. So you’re texting and or direct mail to expired listings and long days on market and stuff like that. do you ever work with agents to bring you deals? It seems like you got two hogs at the trough to feed, right? But it seems like if their alternative is you’re about to lose this listing or here’s another way.

Yeah, so I don’t work with a lot of agents in the way that you’re talking about. Now, if an agent brings me a house or a buyer, then we pay them and all that. But we don’t actively go out and find agents to work with because now we’ve got to explain to an agent what we do. And all they care about is how they get paid. And two, because we get

so many houses without having to go through those hoops and have those conversations. It’s like, why bother? I mean, if I can spend $800 on direct mail and get seven, eight houses out of that, and they’re calling me, that’s a lot easier than me calling agents. Hey, I see you got this old listing and now I gotta explain to them what we even do. So I don’t, I don’t. It’s just, we’ve got too many leads coming in. You have to do it.

Mike Hambright (19:25.122)
And when you go to sell, like how do you do you just put them right back on the MLS? So how do you sell? How do you generate leads for buyers? Yeah. So once we have the house under contract now becomes the backend, finding the buyer. So the number one way for me, because I live in Fort Worth and I, this is what I do, but I just do it in Tarrant County for the most part. I just focus on Fort Worth, know, Tarrant County for me, even to this day, the number one way for me to find buyers.

Isn’t the internet it’s my sign in the yard. So I’ve got our leasing to buy sign goes in the yard I have yellow directional signs that drive traffic to the house and that’s how I find most of my buyers They just see my see the sign and Has the leasing by logo my number and they call me but of course we put on our website leasing to buy My weed out the agents or the people I mean, it’s not on the MLS but people like

call their agent and the agent calls you because they think it’s just a traditional sale versus. Yeah, now if an agent calls me and they’ve got a buyer, whether it be for lease option or just to buy it out right, I’m like, yeah, you can buy it out right. I’m still going to get paid, right? So I’m fine with that. Yeah, totally fine with that. OK. Yeah. But we post on our website multiple Facebook groups as well. We use some syndication websites like TurboTenant that’ll blast it out to multiple websites. But still with all that in place.

Man, put my sign in the yard. It’ll get phone calls. And what does that conversation look like with a buyer? Because usually it’s a lot of buyers that know maybe they have a credit problem. Because you’re trying to get to that person that has a credit problem, ultimately, instead of the retail buyer necessary. I it didn’t work through the traditional retail So how do you say, whenever I’ve owner financed stuff off before, we do it very differently than the traditional MLS, where we’re like, you know,

financing and that’s what lures people in is they’re like you you provide financing you know credit challenged okay like stuff like that right and so how do you lure in that scratch and dent by a credit buyer yeah so so that’s really pretty easy you know with our marketing in place let’s say this is a sign they call me about this house hey I was calling about this house in Hurst yeah I go yeah it’s at least purchase or I lease options lease purchase it’s

Mike Hambright (21:48.974)
price, down payment, monthly payment, and I say, program helps you get, we help you get finance within a year. And then I start asking them questions like, is that something you’re interested in? Yes, it is, okay. And again, I make sure they, you know, here’s how much the down payment is, how soon you’re looking to move, where do you live now? Oh, really? How much you paying right now? I see, okay. And I start to make sure they check off the boxes, right? And then after that simple kind of,

questions on the phone. Then we coordinate for them to see the house. I get the application and at that point then I’m looking at debt to income and the tri-merge report. To see where they stand. So it’s really pretty easy. But I pre-call them on the phone a little bit with some specific questions to make sure they understand what this is. It’s not a straight rental.

in that they understand what the down payment is. What are they paying right now where they live? I to make sure they’re making kind of a lateral move. And how soon they looking to move? If they’re looking to move in six months, I’m like, I can’t help you. This house will be gone in a month. And that’s it. Yeah. But if you consider that it’s probably been on the market already, there was already a sign in the yard. So those that have good credit just didn’t want the house for one reason or another. Yeah, because it didn’t move.

either price or just there’s so many other houses to choose from. Yeah. And I presume when you say that you don’t negotiate with a seller, if they had an unrealistic price, you got to probably rein them in and say, hey, your price was too high. That’s probably, maybe you don’t say that, that sometimes sellers just ask way too much. mean, they’re like, oh, this house over here sold for that. It’s like, that was like before the downturn, before interest rates went up. Yeah. what we’ll do is if seller contacts us,

And I got your house for sale. How much you ask? What’s the address? How much you asking? And I say they’re asking $450,000. Well, then I’ll pull it up and look very quickly, like on Redfin, and say, what other houses have sold? I’m not doing some super granular. Not at that point, And I’m just like, OK. And I go, yeah, that’s about right. OK, great. Or if I look in and go $450,000, there’s nothing around there over $350,000.

Mike Hambright (24:14.809)
And if there are other minds, then I just call them and I’m trying to get you full price here. This is before I put the lease option here. I’m trying to put the numbers together, trying to get you the full price. But I can’t find any data to support 450. Maybe I’m missing something here. Can you tell me where you got that number from? Where did you get your data to support that number? And they go, well, I just know it’s worth it. Well, OK, well, maybe you should have it appraised. And let’s circle back on that.

But believe it or not, with what we do and the sellers we talk to, that happens, but not that often. Not that often. Because I can quickly see what the value is. Plus, and if they’ve had it on the market, on the MLS, well, the agent was looking at comps. And I can pull that very quickly on Redfin. And sometimes there’s just other reasons it didn’t sell.

As investors, often deal with ugly houses, weird stuff, right? So it could just be it’s a weird layout or something. But somebody that’s credit challenged is willing to overlook stuff too, because they’ve got their own issues. So they’re like, if I had perfect credit, then I’d be willing. I wouldn’t take this, but I’m not perfect. And just like when we own our finance stuff, they’re like, well,

It’s like buying a used car. I wish it was a different color, but this is all they’ve got. They don’t have the flexibility. Right. They can’t be as flexible. Yeah. Yeah. So if someone comes to me and says, a buyer says, oh, I want the master down and a pool in the backyard. And I need a fountain that has blue lights or whatever. Well, good luck. Go talk to a builder.

I mean, I go talk to a builder. Why don’t you go just buy a house that fits that? Well, I can’t. Well, that’s why we’re talking. Right. Yeah. So when I was going to ask, shoot.

Mike Hambright (26:21.102)
what happens if they can’t, if they don’t get their credit recruitment fair and everything? What happens on the back end? It essentially just goes. It doesn’t even go back to the seller. It never left the seller. They still own it. They’re just renting it. Yes. What happens if the buyer can’t get financing? Over 95 % of our buyers get financed within a year. But for the ones that, for whatever reason, maybe something happened, relocation or whatever, job loss or something, what happens? Well, now,

It just go back to the seller. Hey, they didn’t get financing. Or if they still live in the house and it’s just that they’re not quite ready for financing yet, well, how much longer do they need? Six months, whatever. The seller will normally extend that for them because they’d rather not have an empty house. Yeah. don’t want to. At that point, if they’re taking care of the house and they’re making the payments on time, it’s like it could be worse. mean, especially if you just straight up rented it, it likely would be worse. Yeah. Yeah. Yeah. Exactly.

But most of our buyers, the vast majority get financed within 12 months. again, that goes back to me screening them. You’re not setting up people to fail. You’re setting up people be successful. No. No. Because I’ll turn someone down. I have no problem turning someone down if their DTI is too high or whatever. Right. Yeah. But once you get that original transaction and you’re on ongoing basis trying to help the buyer get credit, you’re not really involved with the seller. It’s not like you’re managing the property. You’re not involved in any way, right? Yeah. Once we get signed the contract, we’re

I mean, we’re out of it. But we’ve put the buyer in touch. We’ve connected him with the lender who’s going to do the credit repair and the financing. So they’re on their path. And the seller may call us or text us in six or seven months, hey, how’s so-and-so doing? I mean, text the lender and find out. But it’s pretty hands off. And in your model, what’s your buy box? I don’t know what the median price point is in Fort Worth.

300,000-ish or so, guessing. And so you’re not going after necessarily entry-level houses or bottom of the barrel. Like a lot of us, when you’re wholesaling, you’re kind of looking for entry-level, distressed houses, right? Like you want a little bit nicer house, doesn’t need a lot of work, right? Because that causes its own issues. Yeah, so the houses, the price range that we normally work with, really, for the most part,

Mike Hambright (28:46.894)
280 and above and even 280 is on the lower end, but if it’s a nice so kind of at the median price point roughly or Yeah, like I’ve just got two houses in Hearst Same investor that owns them rehabbed in both and there were two about 280 and I just Got earnest money on one today. I’m sorry this week But I took those on because they were fully rehabbed right so as you start going down the price range just

You know, you got to look and say, well, is this the lease option or seller finance? Because if it was a $280,000 house that needed some work, I’m like, hey, this is seller finance, man. It’s not a lease option. Well, and the buyer, once they get in and they realize that it needs work, they’re less likely to exercise that option. Exactly. Because they’re like, I don’t want these problems. Yeah, so you can lease option anything you want. But if you want to be successful, if you want to have

no headaches, there’s a few headaches as possible. You don’t want to lease option a handyman special, because it’s going to cause issues. That’s seller finance. So when they say, hey, this broke, that broke, it’s your house, seller finance. Lease option’s different. So when I started this company 22 years ago, I didn’t know what I didn’t know. over the first year two years, when I was looking at my headaches, I’m like, what’s the common denominator here?

And it was houses I shouldn’t have been lease optioning, which attracted people I shouldn’t have been helping. And so I started moving up my price range and being picky about the house. And suddenly, the problems went away. Yeah. Yeah. So how do you make money? How do you get paid in the middle of all this? We get paid the assignment fee. So we get paid about 5 % of the price of the house. That’s the assignment fee. So $400,000 house, it’s about $20,000. The buyer pays us an assignment fee.

Which interestingly enough is probably cheaper than what the realtor commissions would have cost in the first place if they had sold it, right? You mean for the seller? Yeah. Yeah. So what we do, and I don’t want to get too deep in the weeds on the numbers here, but if they’ve got a $400,000 house, we’re going to put that option price at, $407. So we’re right in there. So we’re raising the price a little bit. So our fee comes off the price, but we’ve raised it, at least by part of it.

Mike Hambright (31:08.622)
So we might be eating into their equity by a point and a half. Yeah, you know, so it’s cheaper than versus with an agent words drop the price drop the price drop the price. They have to pay six percent. Yeah, we go the opposite direction. So that’s so sellers love that. Yeah, that’s great. Yeah. So what do you see? I see the market is is, you know, I don’t know where the market’s going, but you’re going to make hay while the sun is shining. heck, yeah. Right. And then I guess we’re probably, you know, who knows? I don’t who knows what’s going on.

You want to talk about tariffs in China and stuff? I don’t even do it. my point is, we’re probably going to be in a market like this for a while. Yeah, mean, all markets are cyclical. the market definitely had some correction to do. Again, when you see dumb money coming into any market, it’s going to pop. Now, obviously, it didn’t pop like it did in 08, 07, 08. But still, it was as much needed.

But again, you look at like Florida, dude, Florida’s not about to correct anytime soon. When you have over 33,000 sellers just in one area, sitting there for over 30 days, I’ve never seen that before. That’s crazy. To give you an thing, I could be wrong, but I bet, you know, just as notorious of Florida is it’s a lot of houses that are not their primary residents. So it’s people that might live out of state or out of the area.

that are just feeling the pinch of like, can’t afford a second home right now. Especially with the insurance. And they’re more likely to do something like this because it’s not their primary residence anyway. Exactly. Exactly. And to give you an example, to show you how strong that is, how strong that Florida market is for what we do, 33,030 DOM, okay? In comparison to Fort Worth, Tarrant County, which is, that’s the only place I market and it keeps me pretty busy.

Fort Tarrant County has, on average, about 1,600 DOM, 30 days DOM. That’s huge. That’s 20 times. And 1,600 keeps me busy. Yeah. Right. Because I’m not even hitting them all. Right. Right? yeah. So this market we’re in is absolutely phenomenal for So this is a great tool that should be in pretty much most real estate investors’ tool build, if it’s not, right? You know what?

Mike Hambright (33:34.368)
I tell people, especially like some that is wholesaling.

If they’re talking to sellers that want full price and the house is actually moving ready, they put that in the trash. I’m like, dude, you could turn your trash leads into cash leads and pay for your marketing. you trademark that? What? That you could turn your cash leads into cash leads? Yeah, trash leads. I talk about that on page 85 of my new book, Lease Options. These deals in real estate. I’m just going to hold it here for the next 30 minutes.

We don’t want people to stop, hit the exit button. But the reality is, I’ve spent millions and millions of dollars generating leads. And honestly, 70%, 80 % of them want retail for it. And I know what’s going on right now, because I represent hundreds of the top investors in the country, is there’s a ton of people that my house has been on the market for 30 days, 45 days. It’s not selling. So now they’re calling the investor. But they still want retail.

They’re still unrealistic about what the price is. It’s still it’s not they’re not willing to sell it for 40 or they can’t Right because they don’t have the equity if they bought that house in the last five years Well, especially less two or three years, they don’t have any equity, right? And so they may not be able to sell yeah, I mean, I’m sorry take a discount. because of what they owe That’s where we come in. you know, and this is where if someone’s generating a lot of leads and they’ve got all these

leads that where they want full price, those are lease option or seller finance, but definitely lease option for sure. Yeah. So, and so I think anybody, this is my opinion, I think anybody that has a team of, is doing wholesaling and I’ve got a team of acquisition people and then the Dispo people, they need at least one person on that team that is highly trained on creative stuff.

Mike Hambright (35:37.006)
Right, let the acquisition people do the low hanging fruit, Whatever it is, 70 cents of the dollar. transactions. Yeah, boom, boom, boom, boom, boom. Anything that’s going to be creative, like, hey, you’re for this box, boom, it goes to the creative person, the guy or girl, right? Let them focus on the creative deals. Lease options subject to seller finance, all that. But just have one person, that is their job. What about the, so you’re going after people that have had it listed typically, but the traditional real estate investor gets a bunch of, you know, like,

like I just said, they get leads from people that had it listed for a little while and hasn’t sold, and now they’re looking for a plan B. But you also get a lot that are thinking about listing it. They haven’t done it yet. That’s probably more common for real estate investors that generate it. they’re like, yeah, I got your postcard. I’ve been thinking about selling it. And they want retail still. how do you know when to go the creative route with a lease option if it doesn’t have that

proven track record of they tried to sell it and couldn’t. I don’t care if they try to sell it or not. It didn’t matter to me. Right. I’m literally just looking at what’s the address, know, what do you how much you ask if they haven’t tried to sell it yet and they don’t have a number of they don’t have a number of mine. I’m just going to look at the comps and based on this, here’s the full price. Yeah. Whatever that is. Four hundred, four fifty, whatever. And and there you go. So I don’t care if they’ve tried to sell it or not. Right. I’m just looking at what what are the numbers for lease option? Yeah.

But for the acquisitions person, if they were to embed this inside of their current business, how do they know to go down that path versus like, let me try to offer cash first and see what I, like take a few down the wrong Here’s the thing, Mike, is I tell my students that you’re the real estate doctor, that sellers are patient. Now, if you went to the doctor,

And you hopped up on the table and the doctor walks in. He says, hey, Mike, good to see you again. He’s writing out a prescription. He goes, hey, here you go. See you next time. And you’re like, what the hell? What is this? Why didn’t you give me a prescription? I sprained my ankle. He didn’t even what was the problem. So you’ve got to be the real estate doctor. Say, what’s going on? Well, how long has that been going on? What are your plans? Are you moving? What’s going on here? You’re getting this information. And then I write the prescription.

Mike Hambright (38:02.262)
And I may write two prescriptions, say, well, Mr. Seller, I’ve got a couple of prescriptions here. Here’s a lease option. Here’s what that looks like. However, based on your house or location or whatever, you know, I may write a second prescription, which could be seller finance. Okay. Here’s the side effects of each. Right. This one, you’re going to be cashed out in a year. What are the side effects are? Seller finance. Here’s the side effects. You’re going to make more money, but it’s over a long period of time.

It’s not my job to take them to CVS to get that prescription filled. I’m just writing the prescription. the number one, I know I’m going down a tangent here, going down a rabbit hole, but the number one thing you can have when talking to a seller, the number one thing is empathy. What’s going on? What are your plans? What were you trying to do? And then you write the prescription or prescriptions based on what is gonna suit them best.

You don’t go into a conversation with a seller saying, here’s the prescription, now tell me what’s wrong. And so for any acquisition, again, I don’t do wholesaling, but for anybody that is going to be the creative expert, you want to be able to say, okay, well, what’s going on? What’s the story? Blah, blah, blah. And then we’re appropriate, okay, well, how much do you owe? What are your payments? All right, well, here’s a couple of prescriptions that we could write you and let the seller decide.

Yeah. Yep. That’s awesome. So as the king of lease options, you had to write a book. So tell us a little about this book and how do we get it? Let me tell you how to get this book.

1895. But wait, there’s more. Yeah, so I wrote this book. And even though I Lisa Options, you know, you know, it’s just so easy for me writing a book about it. Like, oh, my God, this was actually took effort, you know. And when I wrote this book, oh, man, this is going to be like this thick or whatever. When it got ready for publishing, I’m like, oh, my God, it’s like a pamphlet. Like, what is this? But

Mike Hambright (40:13.482)
It talks about what is lease option, what are the three different types of lease options, how do you make money on each type of lease option, Texas law, I’ve got a whole section here in Texas law, how do we do assignments, what does that look like, how do we do the marketing. But with this book, not only does it have great information, it has QR codes that go to videos. Some of them have free downloads of tools I use.

There’s also QR codes there of training videos. So I’m talking about a topic like Texas Lease Option. At the end of the chapter, I’m like, here’s a QR code on a whole video training I did. Yeah, that’s awesome. So people can go, oh, now I watch. I read the chapter. workbook. And now, like a workbook. Yeah, kind like you still get at daycare, right? Yeah. A little bit. Well, we use crayons. Yeah. So I’ve got QR codes in here to training videos, QR code for people to book a call with me if you’ve got questions. yeah, so this book, it’s on Amazon.

You can also go to our website, theleaseoptionbook.com, lease option. I’m looking at camera number two, or is that camera one? It’s one of them. Camera one of them. Theleaseoptionbook.com, theleaseoptionbook.com. You can get the e-book or you can get it on that website at amazon.com. It’s got a lot of free downloads. $18.95. Yeah, I thought it was kind of expensive, but.

Well, yeah, I did dished it out. Anyway, you brought me a copy, but I cared enough that I actually bought a copy Thank God because this is actually the last copy I have. Oh wow. Yeah, and the good thing is I Amazon has like a 30-day refund policy I May return my own book Just get my $18 awesome. Cool. Thanks for joining us today. Good to see you buddy. Good to see you Mike. Yeah Everybody thanks for joining us today. There’s some good insights here if you’re not using lease options in your business and

there’s no doubt if you’re generating leads for potential distress sellers, a byproduct of that is generating even more leads from those that are not that distressed and not that motivated to sell at deep discount. So given where the market’s at today, this could be another tool in your tool belt that helps you monetize some of those deals that you’re just simply throwing away today. So hope you got some value from this. We’ll see you the next show.