Rent to Own vs Seller Finacing

[Molly Fusco]

Hey, 

I recently remodeled a mobile home in Florida. I've had it on the market for a couple months now. I was under contract for asking price $154k in a couple of days and then the buyers fell out due to insufficient funds three days before closing & I gave them 5 weeks to close! The buyer wanted to get a FHA loan. During this process, I learned that there is a gap of 5 years where they aren't sure where the mobile home was which means FHA loans may not work on the mobile, but they said the engineer may be able to write something up that will work. So I'm not sure if someone can get a FHA loan basically. The market is changing and mobile homes are a bit tricky lol. Anyways the neighbor across the street really wants to buy the home. She came over every week during the renovations, has been texting and calling me to check up on the property. She wants to buy it for her niece and has been really wanting this home from the start. I'm starting to think about selling it to her. I was wondering if I should due Rent to Own or Seller Finance. She wants to rent it, we agreed upon $1500/ month she would pay taxes and I pay insurance until she can give me $20k down or something. I have never done either! Looking for help. I will call my attorney tomorrow and chat with him, but wanted to put this out there. Also, my husband and I renovated this home with our own cash, no mortgage and it would be nice to have $40k to pay back a private lender for another property we just bought right now, but other than that, we don't really need the money. My husband doesn't want to BRRRR this btw. Thanks for the tips and advice in advance!

[Steve Vaughan]

Quote from @Molly Fusco:

Hey, 

I recently remodeled a mobile home in Florida. I've had it on the market for a couple months now. I was under contract for asking price $154k in a couple of days and then the buyers fell out due to insufficient funds three days before closing & I gave them 5 weeks to close! The buyer wanted to get a FHA loan. During this process, I learned that there is a gap of 5 years where they aren't sure where the mobile home was which means FHA loans may not work on the mobile, but they said the engineer may be able to write something up that will work. So I'm not sure if someone can get a FHA loan basically. The market is changing and mobile homes are a bit tricky lol. Anyways the neighbor across the street really wants to buy the home. She came over every week during the renovations, has been texting and calling me to check up on the property. She wants to buy it for her niece and has been really wanting this home from the start. I'm starting to think about selling it to her. I was wondering if I should due Rent to Own or Seller Finance. She wants to rent it, we agreed upon $1500/ month she would pay taxes and I pay insurance until she can give me $20k down or something. I have never done either! Looking for help. I will call my attorney tomorrow and chat with him, but wanted to put this out there. Also, my husband and I renovated this home with our own cash, no mortgage and it would be nice to have $40k to pay back a private lender for another property we just bought right now, but other than that, we don't really need the money. My husband doesn't want to BRRRR this btw. Thanks for the tips and advice in advance!

With a rent to own ( lease option) you are still the owner and landlord.  Pay your own taxes and insurance.   Tenants paying either could be seen as a disguised sale, creating a mess for you.

Lease options are my favorite slow exit strategy, but they are slow. I like them especially if it gets me to 366 days of ownership and friendlier l/t cap gain tax rates.  

If you need $40k, better off asking that as a down payment with seller financing.