I am looking into establishing a business around the rent to own model. I feel as though there is certainly a market for such a model and it has the potential to be great on both sides of the deal, that being 'tenant and landlord,' or however you prefer to phrase it.
What I am looking to establish is, as a rent to own landlord/investor, what is my competition? Assuming that the target group is unable to attain a conventional loan and put 20% down, why wouldn't they just go with an FHA or other type that offers low down payment options?
Any advice or knowledge on the subject would be greatly appreciated!
@Brianna H. , a lot of times the issue isn't the down payment, it is poor credit so that they won't be approved for any mortgage at the current time. The potential tenant needs some time and effort to repair their credit.
You live in MI where houses are cheap and 3% in MI aint 3% in the North Shore of MASS or 3% in the valley of LA CA (ex $900K for a small lot, 1500 ft 3 B 1 B Studio City CA).
Link above is the FHA loan limits. Many nice areas are over those limits for FHA.
I coach seller financing on BP See http://www.biggerpockets.com/blogs/3-reiskills-and...
Here is what I would do:
1. Get a good Real Estate Attorney in MA, contact http://www.biggerpockets.com/users/BunkerHill for a referral
Account Closed is awesome.
2. Learn about financing, both conventional and FHA. Get down payment assistance in MASS info, start here http://www.massresources.org/down-payment-assistan...
3. Get a RMLO (Registered Mortgage Loan Originator) for underwriting the tenant buyer to see if they can qualify down the road. You need the RMLO for lease optionss. Contact [email protected] if you have trouble for a name of a RMLO.
Here are some benefits:
Benefits For Buyers
A lease purchase is not an option to purchase. Buyer must get financing before end of lease or lose the down payment, usually 3%.
Note 2. As an Investor,
a. you can assign either a Lease Purchase or a Lease and Option for a fee, generally 3%.
b. you can do a sandwich lease option, stay in the middle of the deal. See http://www.biggerpockets.com/blogs/3/blog_posts/42...
@Brian Gibbons Great posts as always re: LO - thanks Brian.
Hi @Sam B.
You are too kind,
There is a ton of Lease Option and Sub2 and Dodd Frank here on my BP Blog
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