Anyone specializing in lease or rent to own? Or that a dead end n

17 Replies

Tried to search but not coming up with much on the exact topic I'm looking for. I have been thinking over lease to own and rent to own property. I wanna buy properties well under market and rent to own to people who have had credit issues or maybe other issues. Obviously picking who to sell to would be key. Anyone with alot of experience on the subject? How does it hold up as far as legality and also is there a decent market for it out there or more trouble than worth. Thanks in advance my awesome BP friends!

Originally posted by @Joseph Watson :

Tried to search but not coming up with much on the exact topic I'm looking for. I have been thinking over lease to own and rent to own property. I wanna buy properties well under market and rent to own to people who have had credit issues or maybe other issues. Obviously picking who to sell to would be key. Anyone with alot of experience on the subject? How does it hold up as far as legality and also is there a decent market for it out there or more trouble than worth. Thanks in advance my awesome BP friends!

So I specialize in creative financing types of deals (Lease/Option, Sub2, Contract for Deed/Land Sale Contract etc...). There is 100% a market for Rent to Owns (R2O's). One of my R2O's had over 1000 people contact me wanting it. As far as legally it stands up just as well as any other type of normal contracted agreement. Why did you think it might not? R2O's and Contract for Deeds are some of the most profitable deals you can do -- if you set them up right.

@Skylar Simpson just other people telling me horror stories on how tenants didnt pay or finish out leases and having issues with the legal system at that point. You cant believe alot of it bc people will tell you anything hoping you will fail or not try. I cant tell you the negativity that came my way when I started looking into real estate brotha! Apparently everyone has done real estate and been screwed every time according to them lol

@Joseph Watson , I've never heard it being illegal in Arizona. I can't speak for other states.

Lease options are great, but I normally see them as a 2nd or 3rd option after the seller refuses a cash offer. 

There is a decent market for it. If that's the avenue you want to go, I'd call landlords with rentals that haven't been leased up yet.

Originally posted by @Joseph Watson :

@Skylar Simpson just other people telling me horror stories on how tenants didnt pay or finish out leases and having issues with the legal system at that point. You cant believe alot of it bc people will tell you anything hoping you will fail or not try. I cant tell you the negativity that came my way when I started looking into real estate brotha! Apparently everyone has done real estate and been screwed every time according to them lol

 Oh gotcha. Ya I know what you mean about the negativity when you start talking about real estate. I had close family members look me in the face and ask when I was going to get a real job even though I was making 3 or 4 times their yearly income. It's pretty silly but it's just how it is. 

As for being screwed because of tenants - That happens for sure but if that's whats going to deter you from becoming financially free then maybe Real Estate isn't for you. There is a reason things like insurance and proper deal structure exists :)

Originally posted by @Joseph Watson :

Lol it ain't stopping me brotha I'm tired of being a cog in the system! Just wanna make sure I get everything structured the smartest way I can

 No doubt. Well keep asking questions and making sure you do things the right way. There is a lot of bad information out there so always make sure you get the best info you can. :)

I used to do quite a few during the recession.  For me they worked best with low equity pretty houses. These days everyone here seems to have plenty of equity so it's a tool I have just in case.   Maybe try mobiles for sale in parks?  They get tired of paying lot rent pretty fast.

Sandwich lease options are illegal in TX, btw.    Since TX was brought up...

@Joseph Watson Lots of opportunity out there for the creative investor, on both the buying and selling sides. My go-to source of lease option deals for nearly 20 years has been FSBOs. Just call them and ask straight up if they're interested in selling on a rent to own. I personally got tired of explaining myself, so I just move on to the next if they don't say: "YES!"

We manage over 300 units that are "rent to own". About half are ours and we would never buy a single family house and not place it into this program.  We believe our returns are better than straight renting, otherwise we wouldn't do it this way. One agent and one office staff member both part time can handle this many doors easily. We have about one manager and maintenance guy per 100 doors that are "straight" rented. This is just one benefit. If it's multifamily, we rent. If it's single family, we don't rent.

@Jason Dillard Sounds like a guy I used to know in Missouri. Him and his wife worked 3 days a week and they only needed 1 part-time bookkeeper and 1 part-time handyman to manage a portfolio of 100-150 rent to own single family homes.

It’s illegal in Texas but there are some legal loopholes. I invest in this strategy through a full service company in OKC called Berry Rock homes. It’s a great business if done right.

@Joseph Watson I love the lease option strategy. That has become our main strategy that we use and like @Jason Dillard shared, it is more lucrative and less hassle to manage.

The way we use this model is we buy properties under market value that are below the median home price for our area and then we fix them up where our all in is 75% of the ARV and then we put them on the market for 5-7% above current market value on a 4-year option.

The key to using this model is the contracts that are used.  I would suggest not doing seller credits until the Dodd Frank act gets repealed completely and to make sure your contracts are done correctly. You may want to connect with someone who has done many of these to help you with your contracts. We had to purchase contracts that had been created especially for this strategy by an investor and the lawyers on his team. The contract cost us around $500 but it was well worth it. 

I'd be interested in hearing about the "legal loopholes" in Texas.  I've gone over the statutes pretty thoroughly, and when there's a consumer-buyer, see nothing but landmines and booby-traps.