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. 

Thanks, 

Peter

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.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.