I have mortgage liaisons working with my rent-to-own tenants. As I have mentioned, they are there to take care of figuring out if the renter is going to be able to buy.
The primary exit strategy with a tenant is for them to buy the property. I obtained them through a property lease option or a land contract. The mortgage liaison is checking up with them to see if they are in a position to buy.
If this transition from tenant to buyer is not properly facilitated, it can take forever.
The mortgage broker will pay attention to us because we have piles of deals on their desks. They couldnít babysit my tenants, so my liaison did.
Now the liaison has to handle this with finesse. They cannot be beating down the tenantís door the day the tenant gets the keys. That can be very unsettling for the tenant.
If they start knocking right away, itĎs like a piranha is attacking. There has to be a good fit in there and in our world itís anytime after Week 1 and before Week 3 or within their first month. Thatís when we speak with them. You give them time to get settled in and then get a hold of them.
We answer their questions and keep track of the tenant. They donít always understand how important it is to keep their credit clean. We can coach them on how to do that so that they can eventually cash out with us.
What we found is that with this mortgage liaison system, we were starting the selling process quickly. It went very smoothly. The tenants were eager and educated.
We know what they need to work on and we teach them how to do it. They often take us up on it and then become homeowners.
There are some little things that we look for in the tenant. If they work well with the liaison and if theyíre taking phone calls, they are generally going to be willing to buy. If not, then weíve found that itís safe to assume that they arenít going to be buyers. Often itís because they have shifted gears and lost a job or has some other life changing event.
Our mortgage liaison will bring different mortgage brokers in. We sometimes end up having five mortgage brokers. Generally our numbers of mortgage brokers range from three to five. But, yes, we bring in as many as five sometimes.
My staff can generate enthusiasm in them. That is why I require that my staff be proactive in this process. They need to outline what needs to be done in this deal. If it is handled well and the tenant is game, a sale is made. It is a great system to have.
Every once in a while we get someone who comes along with a history of being evicted. We decided that if they want to move in, they have to give us an extra $100. This way, if we have to evict them, we evict them with their money.
Now, if I didnĎt have to evict them at the end of twelve months, they could have their money back.
We understand that people have had circumstances in their lives that lead them to get evicted from a property. Maybe their landlord was just plain bad news.
So if they have proven themselves to us, we can go ahead and cash out with them.
One of the things they need to know about the approval process with the loan agent is that they generally need two weeks pay stubs. If they are self-employed, they need to use tax forms. This sets up the process for preapproval.
It is best to just fax this information to the mortgage office.
The person doing this work on our end is the mortgage liaison person. You will see them running around faxing or running copies. They are doing things like making sure that the tenant buyer gets the originals back and we get a copy.
Now if it doesnít work out with the tenant, then we have a system to get the old tenant out and the new tenant in. We have to go back to the drawing board.