buy w/ owner financing/sell lease to rent

6 Replies

Hi All. I am new to this and have little to no cash to speak of. I am going to lay out my plan here and if someone can let me know if this seems like a good plan or not and why I would greatly appreciate it.

1. Find a FSBO that will sell with owner financing. I would take a deal with a 5 year balloon payment with plans to have the buyer/renter buy inside that time frame.

2. Since I have little to no money to give the owner as a down payment, I can either find a private money lender to lend me the down payment or try to work the deal so that the down payment would be due 3 months after the deal so I can use the down payment from the rent/owner I find.

3. I could offer the seller 90-95% of value since I would make money on the renting side and since the sale would be 3 years down the line I would sell it for 105 - 110% of current value.

I am aware the any rent from the rent to own cannot go towards their purchase, I must keep that separate. I will get an attorney for the deal and will have to have the house appraised and make sure there are no liens or back taxes owed. My concern is what I DON'T know. I am a single father and work 2-3 jobs and cannot find down the line that I screwed something up just because I was ignorant. Any and all help would be greatly appreciated.

You need to ask yourself why would a seller let you take over thier home with no skin in the Deal.

Joe Gore

I assume it's the same as other owner finance deals. They get paid with interest and then the house is sole in 3 years or less.

That might be true but the seller have no protection when you have no money in the deal.

Joe Gore

correct me if I'm wrong, and remember i'm new to this, but the protection is that he gets the monthly payments and if I can't pay, he gets the house back to sell and keeps those payments. He would actually want me to stop paying. Am I wrong there? Are you saying it would be very difficult to get an owner to agree to this?

We do this with lease options, and yes you can find motivated sellers. The key is they need motivation, just like any other seller. If they have few options because they have no equity they are open to this. However, with that little equity, it's not always worth it for you to stay in the game. You can just assign your interest to an end buy and collect an assignment fee. If you stay in you are responsible for paying the rent even when the house is empty and if there is no equity at the end for you to collect it doesn't make financial sense to take on the risk. Look at lease option cooperative assignments, it's an easier way to do it, with less risk.

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