I have a property that I am looking at. It's a 1700 sqft 3/1.5. I am trying to determine what I could expect it to rent for when renovated. The listing agent is saying 15-1700.00 but that seems a little high. We may possibly do a "rent to own" and I'm curious what we should charge rent wise in that instance. I know you generally require a decent down payment and they pay higher rent. I've used Zillow and CL but am not really getting a good grasp. Any tips?
Hi Ryan, I wouldn't go off of rents that the listing agent tells you, he is only in it to sell the house. I would contact a couple of realtors that are familiar with that area and ask them about rents. Also get onto Craigslist and see what houses in that area are renting for. You "typically" want rent to be 1% of the mortage ie...$1,000 if the mortgage is $100,000. Ideally and for better cash flow 2% of the mortgage would be better.
You can try rentometer and padmapper for some comparables. You can also call some property managers around the area and see what they think. They'll be happy to answer some questions if they feel you'll be doing business with them. Beware, they might fluff things also.
@Travis Boyer Also, for the 2% rule: I like for the gross rents to be 2% of my total cost basis of the property. This would be Purchase Price+Closing Costs+Any Rehab. Just going off the loan amount won't do it for me... What if I put 80% down?
Can any of you guys advise me about how setting up a rent to own agreement actually works? From what I've gathered you collect a small dp (5-10K) charge a higher rent and they are responsible for the home (like an owner would be) then they have an option to purchase the property after a certain amount of months at a previously agreed upon price. From what I have read 2 years is the max that can be done for? I assume the end goal is that they have established enough credit in that time to qualify for traditional financing am I correct? If I own a property free and clear can I owner finance for the entire term (15-20 years?) From a cashflow perspective wouldn't that be much safer and lucrative then traditional 12 month leases?
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