Renting Your Rent to Own?

Question

I just had a question I was curious about. I hope someone could kill my curiosity. If you buy property as a rent to own do you then have the right to rent it out or resell it? I am aware that it would be rare to find a deal like this with equity. But because home prices are so low there is a big possibility they will gain equity over time.    Is this a possibility or does it all depend on how the initial paper work  is signed?

Manny Cirino · Answer

I'm not trying to jump around. I wholesale short sales it has been good to me. But I have thrown away so many leads and I recently came to realize that the more strategies I know the better. Why focus on one thing only? Because I have such a love for the business that I like to study other strategies for fun, plus I like new challenges one niche is boring! More niches, more Knowledge, more money!

Who ever said jack of all trades master of none didn't realize that the guy who new a little bit of everything eventually got enough jobs to become master of all.

Bill Walston · Answer

Hi Manny - Welcome to the world of Lease Options :-)

When I'm doing a Sandwich Lease Option I like to get a 3 year term with the seller.  When I find my tenant/buyer I contract with them for a 12 - 18 month term.  That gives me some "breathing room" should they decide to not exercise their option.

It has not been my experience that tenant buyers do not "buy."  Most of mine do, but that may be because I have them work with a mortgage broker during the option period in order to get them qualified and get their financing in place.  Does that mean that every T/B exercises the option?  No, but it's generally not because they cannot get financed.

I have the tenant/buyer responsible for general repairs (stopped toilet, minor maintenance, etc.) up to determined dollar amount.  The owner of the property would be responsible for amounts above that limit, as well as for any structural repairs.

Feel free to drop me an email if you have other questions.  And you can check out my blog.  I have a few lease option articles there.

Dale Osborn · Answer

Instead of jumping around from one investment type to another - why not find what you are comfy with and do that over and over until you reach your wealth goals?

Manny Cirino · Answer

Steve thanks for pointing me in the right direction. Now I have read threw everything and of coarse naturally all it did was bring up more question. I do understand the majority of the info but a couple of questions I still is. 
1.)When signing the option contract generally what is a common time frame that is put on the contract. Is it 1 year, 2 years, 10 years how long does the buyer have to exercise there option.

2.)in one of those threads someone stated that most tenants never exercise there option they just rent. I thought when a tenant/buyer came in to the home you acted as the bank and they as a common buyer. Not as a tenant with the option to purchase. Is the tenant made aware they are renting for a certain period or is are the contracts just written separate to make easy eviction?(am I confusing lease option strategy w/ rent-to-own?)

3.)In a lease option who is responsible for the repairs. What I am really asking is in a sandwich lease option let's I am in the middle do I get the owner to pay my tenants repairs or is it on my or the tenant buyers.

This is just curiosity by the way. I prefer subto resell strategy. But I like to be aware of all option when evaluating leads.

Steve Babiak · Answer

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