BiggerPockets

How To Save A Rent To Own Deal And Make $100,000 Extra.

My wife had a property she bought in 1992 for $110,000.00, and in 2007 it was appraised for $630,000.

It was in a trendy, arty part of town every hip urban 30-something wanted to be living in and partying in.

We decided to test the waters and we both wanted to net $630,000.00.

We tried a friend that was an agent, and she could not get offers on this immaculate home over $530,000.00.

Then we tried another agent, and no luck. Not one low ball offer!

And property slump was not even in full swing yet!

I was reluctant to get involved, this was her baby; but I asked my wife if she would consider a rent to own on the property.

She said yes as long as we netted $3000 a month.

So I marketed for a buyer, and found one willing to do this:

• Lease $3000 a month for 12 months, extendable and renegotiable.
• $2000 non-refundable option payment toward the purchase price
• $400 rent credit toward the down payment per month (for on time payment)
• Exercise Strike Price at $639,000.00
• Tenant Buyer had 2 years to get new financing.

As it turned out, the buyer could not get financing, and then asked a great question,

" If I could get a buyer for this place at $639,000.00net to you, would you pay me back (refund me) for the 16 months of rent credit I have been here paying in, plus the $2000 option payment back?

So $400 x 16 months = $6400,
and the $2000,
was $8400.

We said YES! As long as we netted our number.

The deal closed netting us $639,000.00 - 8,400.00 = $630,600.00. No agent's commission!

Not bad for a tight market!

Lesson, "always listen to your tenant buyers' suggestions!"

Comments

• 

  Johnny P. — over 1 year ago

  How did they find a buyer?