Rental or rent to own?

Question

First post so please be gentle. I bought a foreclosed townhouse in 2009 with the intention to rent it out forever. Now that I've started this real estate investment journey, I'm wondering if I should approach my tenants with a rent to own option. They love the place and say they don't plan on moving. I bought it for 125k in Woodbridge VA and owe about 114k. The rent is $1395/month so I'm marking about $430/month. According to Zillow it's worth around 216k. Would it be better to explore the rent to own option or just continue as a normal rental property? Thanks in advance.

Rob Orazi · Answer

Please don't take Zillow at their zestimate. They have never actually set foot on your property. Do some quick comps yourself or call an agent and give them $50 to give you BPO or $300 for an actual appraisal from an appraiser.

I don't know the market in Woodbridge VA but after a quick google search looks like this place is within commuting distance to DC. If that's the case I personally would never let it go, ever. I would do my best to keep those tenants long term raise the rent every so often and be sure that the maintenance was done so I could count on this house being a considerable portion of my retirement. Not every place is a great cash flow place some are legit buy and hold and what you are waiting for is the property appreciation. That's what I would do if Woodbridge is a commuter town to DC if it isn't I might cash out the equity and appreciation.

Lamar Curtis · Answer

Thanks for your response. it's definitely an easy commute to DC because that's what I do daily. I did originally have plans to never let it go and I think I let the information overload cloud my judgement.the property is in great shape with only a furnace replacement in the future. I've already repiped the unit to get rid of the original PB pipes that had began to sprout leaks. New hot water heater a couple months ago as well.