Anyone here done a rent to own/lease to own on a home as the seller? Care to share your experience?
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If your intentions are to sell it to them then you would want to sell on a land contract. If they don't want to take the responsibility of the home then I would only rent to them.I host with Vacares -
Get 4 - 7 months rent down and bump the normal rent rate by a few hundred per month.
My experience is that if they can't afford the upfront chunk they'll never make the balloon payment or be able to get financed.
You should be paid for tying up an asset.Comment
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Land contract is when you sell them a home and instead of them financing through a bank they finance through you. You charge a down payment and charge them whatever % interest you want.I host with VacaresComment
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AKA contract for deed.Comment
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I did that with my 1st house and after 3 or 4 years they re-financed through a bank and I got paid in full with a few years of interest, so turned out better then if I would have just sold it outright.Looking for Opportunity!
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Lease w/purchase options have a lot of benefits and I'm surprised more owners don't do it, maybe because they don't understand how it works.
Its a quick way to get a contract on a property, and usually at 5-10% higher price than you would normally get.
If the buyer/renter does not buy the property at the end of the lease, you not only get to keep their option deposit but also any option money added into the monthly rent.
The renter/buyer normally is responsible for maintaining the property and fixing anything that a landlord normally would handle.
I strongly suggest having a separate lease agreement and a purchase agreement. The reason is if you ever have to evict it is much harder for them to say they were purchasing the property which would force you to foreclose instead of evict.Comment
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or you just don't buy a property that is falling apart and screen your tenants for credit, criminal and job confirmation and make them sign a lease.
No phone calls, repairs maybe once every 10 years or so? People doing this with 50 properties without a problem why can't everyone else with one?webmaster at pimproll dot comComment
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Lloyd, offer your prospect a 1 year lease and after that do the contract for deed, lease/rent to own deal.
You'll see what he's like and he'll see if he really likes the house.
Offer to lock the sale price in now if he balks at this.Comment
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If you're a real asshole you can structure the deal so that you act as a middleman, charging a few percent over what you pay the bank yourself, and include a clause that if they default you take back the property (forfeiting all additional funds above normal rent they've paid, and any equity...)
I know of some shady characters who have done this, they've "sold" the same property multiple times because the rent to own tenants eventually default. The kind of people who are interested in rent to own are likely to have problems getting a normal bank loan, so there's a much higher chance from day 1 that they'll default. Easy money for the scammers.Comment
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depending on where you are or how you do the documents, you might be entering into a land contract in which case you would need to foreclose on them to get your place back. So an option is to separate the two transactions. Rent to them. Give them an option to buy. You will quickly see that giving them an option then makes zero sense. So an above market rent for two years and the option are separate but it is understood why the rent is higher.Comment
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I know a guy that has 23 properties he does the Lease with option route for legal reasons.
Lease is a lease. DON"T do land contract. That's harder to get them out if they stop paying.
A lease you give them an eviction notice and they're out.
He sets it up to take 10% or close to it as down payment.
Then charges around 8% interest and he carries the insurance on the property but the buyer needs renters insurance for their stuff.
So he pockets 10% up front and makes a few bucks per month on the payment.
If they stop paying evict them and sell it again.
There's big big money to be made doing this and people are right.
Do your background work. Don't lease your house to ANYONE you haven't done your background work on. People can really fuck up a house if you two get into a argument over them not paying and you telling them they're going to be evicted.
Generally though with 10% or so down people have some skin in the game so they're not likely to trash the place.
Good luck to you.
I plan to do this with my house in January.
It's listed with a realtor for 6 months. If he can't sell it I will go the lease route.
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I know that Asspimple is stoopid ... As he says, it is a FACT !
But I can't figure out how he can breathe or type , at the same time ....Comment
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Nah, the owner entered the agreement in good faith and the tenants fucked it up. Is the place supposed to sit empty? Of course not. Is the owner supposed to change how he offers the property in the future? Of course not. They move on to the next person. If they don't fuck it up they end up buying the house... if they fuck it up they end up on the curb.
Also, there is risk to these agreements. Why not charge above the mortgage rate? Risk is supposed to come with reward. The owner is on the hook if the rent to buy people trash the place and abandon it so why shouldn't the owner make money for exposing himself to potential risk?Comment
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Why is that?
Sheesh. You really think I would rather the guy not just buy the fucking thing? I am doing him a favor. I am trying to fathom what you have pictured in your mind, but it just is not happening. And what do you think a bank is going to do if you default? You are not getting ANYTHING back from them.
Not sure what harsher penalties you are thinking about. And people likely to default are likely to fuck up the place. Why would anyone want them?Last edited by baddog; 07-31-2012, 09:25 PM.Comment
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Rent to own is usually targeted to people with bad credit and there is usually extra money to be made.
The people that successfully do rent to own will likely rave about it while those who bomb out will say its bad.
Just like with payday lenders. Those that use them responsibly will say they it got them out of a jam and they happily paid the high fees (especially if it avoided a bunch of bank overdraft fees). Those stuck in a perpetual loop will say they are horrible.
So should rent to own and payday lenders stop existing because people cannot use it responsibly?Comment
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So, last night I got another rent to own request.
Her: Is there a rental or lease-to-own option? I am very interested in this house!
Me: Possibly. How many people, ages, employment, referrals?
Her: There will be 2 as of now, however a family is in the near future. ages are 18 and 20. employment is Northcoast Distributing. and I am a student at Ivy Tech but will soon be getting a job.
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How can this go wrong?Comment
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