We have a single family home we are looking to do a rent to own with a neighbour of ours. We have been buy and hold investors for 10 years but have never dealt with this before so have a few questions.
1) We currently have other tenants in place with a lease, what are the rules for notice to vacate for them?
2) How do we decide what to charge for the option deposit? I have read varying articles saying between 1.5 and 7%
3) How do we determine the monthly rent and rent credit? Is this just a negotiation between the seller and potential buyers based on what they would like?
4) Does anyone know a good real estate lawyer in Calgary that may specialize in these?
We would appreciate any advice anyone has to offer!
HI, Nick, how are you today?
Nick, these are all really good questions that you ask.
1) We currently have other tenants in place with a lease, what are the rules for notice to vacate for them? - as far as we know existing tenants have to get 3 month notice to vacate, however, we had similar situations and were able to negotiate with the tenants what we needed.
2) How do we decide what to charge for the option deposit? I have read varying articles saying between 1.5 and 7% -this is correct, when it comes to rent to own there is no set price for the option deposit. We usually talk to the candidate to find out what works for them the best and hopefully it works for us as well. If not we negotiate to make the deal happen.
3) How do we determine the monthly rent and rent credit? Is this just a negotiation between the seller and potential buyers based on what they would like? – monthly rent has to cover all expenses on the property 100% plus we usually charge extra 200-300 per month for the rent credit
4) Does anyone know a good real estate lawyer in Calgary that may specialize in these? – it has been our experience that most of the RE lawyers in Calgary have experience with rent to own (rent to own is not a complicated real estate transaction for them by all means).We can provide some names, PM us at your convenience.
Nick, do a google on Barry Maguire REIN rent to own... he’s doing a course in red deer in a week and if I wasn’t still playing hockey I’d be going. It gets fabulous reviews. I’ve been a REIN member for over a decade and know several folks attending.
Thank you very much for the insightful information Veronica! Ill definitely let you know if I need some names. We are currently waiting to see what our neighbour thinks of the property before we proceed further.
Sounds like it would be an informative meeting Kris! I actually follow Barry on twitter, but Ill have to see what he has to say on rent to owns. Unfortunately Im tied up with kids activities next weekend so wont be able to attend.
They also do a “by mail” program where they’ll send you all audio docs and PDF’s I think. I considered it this year but have decided to focus on a different area for now. If you call the REIN office they’ll hook you up I’m sure. It’s a simple in concept but extremely detailed and paperwork / knowledge intensive strategy. Don’t get caught with your pants down if you move ahead with it, definitely use a lawyer AND lender with extensive experience with RTO / Lease Option, no rookies.
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