A rental property I picked up for $25,000 is now worth about $50,000 due to improvements I have made as well as the local economy improving. I've decided I want to try a "rent to own" deal. Does this setup sound correct?
List price $50,000
Option money of $2,000
Fair market rent ($600) plus money to put towards down payment ($100)
3 year term
Can someone point to a beginners guide for the process and I would also be interested in hearing any success stories with this niche. I'm still trying to find my investing identity and what works best in my market. Thanks!
@Christopher McGuire Not quite right.
If it's worth $50k retail, list is for $57k for the additional risk and they don't have to pay for the house for 3 yrs so it will be worth a lot more than $50k when they actually convert to purchase (execute the option). The option is probably worth $4k ($2k up front and $2k to close) to ensure they can do it and stick with it.
The lease is totally separate from the option contract. No amount per month can go towards the down payment.
You might want to try a one year lease.
You need to use a licensed mortgage originator and qualified attorney to stay clear of trouble.
Best of luck!
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