Rent to own Landord? Good or bad?

4 Replies

I have one of my friends that is going to be looking to rent to own in a few years and I was considering being the RTO landlord for that. I have never done a RTO and was wondering what thoughts people here that have done RTO before?

Do you typically pay to fix things like a traditional landlord or does the tenant? What if they dont have the funds to make repairs for example a new roof or a new water heater etc. 



@Peter G. we do some here in my market. We let the tenant be responsible for all repairs and you want to get a good down payment or option deposit from the buyer. Have an attorney draft a lease option agreement for you or get one from a local expert. 

We have done a few. Only once have we had someone actually purchase the property. Our agreement says that they are responsible for any repairs under $1,000.

I would not do a RTO with a friend. If they don't end up purchasing in the end and you keep their option money there probably will be hard feelings and may lose a friend.

I wouldn't ever recommend doing this with a friend, its business and could end the friendship. 

Another option is to require them to purchase a home warranty. Usually cost around $50 mo and covers a lot of repairs, there are additional servicing fees similar to deductibles, but at least they don't have to come up with $5K to replace the HVAC, etc.

Thank you all for your reply's ruining the friendship is what i was most concerned about with RTO. I will think on it more.

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