Lease to own with our Owner Financing - Self directed IRA...?
We have some interested tenants that want a lease to own or buy on contract type scenario that we own 100% under a self directed IRA.
Seems pretty straight forward --- we draw up financing terms for them, and then they make payments directly into our custodian based on those...
Here's some verbiage I just inserted into a boilerplate IOWA LEASE TO PURCHASE OPTION AGREEMENT Chapter 562A (Uniform Residential Landlord and Tenant Law):
Please let me know if there's other things to consider, or someone that's been down this road before!!!
Certain things on my mind include whose responsibility taxes and insurance would be... among other things....
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10. FINANCING AVAILABILITY. Seller/Landlord has communicated the option/availability of financing available upon execution of purchase option by tenants, pending a good faith review of financial disclosure information on the part of tenants, upon tenant execution of option to purchase. This financing would be available so as to provide tenants the possibility of building an equity stake in the property, with the eventual contingencies accounted for, for instance in the possible eventual sale of the property. Tenant lease/rent-to-own (length of residence) would dictate tenant's ability to execute/initiate a sale of the property. Seller/landlord desires tenants to reside in property for minimum of 10 years to initiate sale of property, measured from start date of tenancy.
At this point, tenant can initiate a sale of the property, if desired, to realize equity position.
Anticipated Offered Terms for Financing:
Consensus WSJ Measured Prime Rate + [2%-4%] on 30 year term with minimum payment being equal to offered monthly rent amount (extra is applied as principal reductions)
Default or non-payment of rent shall result in forfeiture of any possible equity position in the event that the option to purchase is
If tenants/buyers wish to execute their own financing options during owner offered financing term, sellers/landlords will allow for this after the end of five years after lease start. If this is the case, tenant/buyer balance on the house would be need to be paid off in full at that point.