Willing to help new RE investor in N. Florida area get started
Hi everyone (sorry for this very long first post). I am not offering a specific deal, just looking for advice on structuring a deal. Please note that I am not revealing any specific information that would make it possible for me to solicit any kind of deal.
My wife and I own successful waterfront vacation rentals on the Gulf Coast in N. Florida and long term rentals in GA. We are now beginning to buy $25k -$30k mobile homes (on land, not in parks) and SFHs in the inland area of Florida near our vacation rentals to use as long-term rentals. We will be closing on the first property there on Feb. 28th, 2018 and the 2nd property shortly thereafter. We will be buying and repairing/rehabbing 2-3 properties per year in that area over the next 5 years.
We know that we can easily and quickly rent the homes out for $600-$700/month, but instead of renting to a tenant, we have an idea that might help out the right person (who does not have start up cash) to get started in real estate investing and I'm looking for advice on whether or not to go forward with it.
We would be willing to let the right person rent-to-own our first rental property that we will be closing on, on Feb. 28th. This person would pay us $650 month in rent (this is less than the Zillow rent zestimate of $750/month and a more than fair rent for the area), and all of that rent payment would go to the purchase of the home (its a 2/1 mobile home).
In 5 years, the novice investor will have paid us $39k (a small profit for us) and will then own the home. At that point, the investor could move out of that property (and begin renting it to someone else) and move into one of our other properties and rent to own it. Applying the rental cash flow from the first property bought from us, the investor could pay off the 2nd property quickly (1-2 yrs?) and could then move out and begin renting out their 2nd property. He or she could then rent to own a 3rd property from us. Within 10 years the investor could own 3 paid off properties.
Here's the catch. The investor would have to live in each home until it is paid off. Why? Because we believe the investor will take good care of the property and pay the payments on time. We would not want the investor to sublet the property. This would mean the investor would also need to work a full time job in the area (to be able to make the monthly $650/mo. payments).
We envision someone getting a job and working at one of the local restaurants or small businesses in the area, living in the home, taking good care of the property and owning it in 5 years. Of course, our attorney would draw up all of the necessary documents and make sure that we are not violating any state or local laws with the rent to own agreement.
Does anyone see any problems with this kind of deal, that I am missing? -- Of course I realize that we could make much, much more $ by keeping the propert(ies) and renting them out long term to tenants (and we have other properties that are, and will be rented out the traditional way), but we have a heart for entrepreneurs and RE investors and really want to help some young person be successful who otherwise might not have that opportunity. We have been blessed and we want to help others.
Thanks for any advice, suggestions!