All Forum Posts by: Dale K Poyser

Quote from @Madison Wilson:

Interesting! I have yet to run across a rent to own experience. I find it very intriguing for buyers that otherwise have trouble qualifying for a traditional mortgage. That is where the concern would come in, is vetting your tenant/buyer to be trustworthy to not default on payments. I am not sure if your mortgage company allows loan assumption, or your loan program specifically, but it could be a safer option if so. I would definitely take your time to research and continue to gather information from others who have tried it first hand, to see if it seems like a good option for you. Also, there could be no harm done if a lender could give them an idea of what they would qualify for traditionally, to see if it matches your property criteria/value. 

@Madison the tenant would not be getting a deed to the property until they purchase.  So the due on sale clause would not apply.  They would be treated like a regular renter and all risks associated with having a renter would apply. You might be think of "subject to" where the buyer would get the deed to the property but the mortgage stays in the owner's name.

It all depend on your long term strategy for the property. It can add additional streams of income for you, and rent to own tenants usually take better care of the property since they have a strong sense of ownership. Couple points to consider:

1 - The non-refundable deposit required to make the option valid (you get that upfront)

2 - Tenant takes greater pride in the property

3 - You can lock in a sale price now. 

4 - Most lease +option tenants still won't qualify for financing when the option period is up so they will do a new contract (new deposit, new negotiated sale price)

5 - Good hedge against cooling prices. If prices cool maybe the tenant wont exercise the lease + option contract and you keep the deposit

I'm in the portfolio building phase and have some emotional attachment to my properties. However if I had multiple properties I would consider this for some of them. Imagine getting $5k - $10k in addition to your cashflow every 3yrs.

Quote from @Mike Rodriguez:

@Dale K Poyser I'm in CA as well with a few properties in Little Rock. I just moved a few properties over to Century 21 from Evernest. I had a bad experience with Evernest.

Hey @Mike what was your experience?

If she is open to the lease option, then I'd go with that so that you can get control of the property asap. You could also bring a silent partner into the deal who shares in the profits until they get their money back. 

For the cabin upgrades and other items (roof repair, etc) you mentioned you can look into 

1 - non-secured line of credit  if you have decent credit history

2 - personal loan

3 - Check if the seller has equity in the property and see if she would be willing to get a HELOC and roll the balance into the purchase price (this is more risk for her but if you convince her this will be a value add she might got for it.

If you plan to rent the property out you will need the appropriate insurance, an umbrella policy will also be a good idea.

Make sure the seller knows your intentions; that you plan to rent the units out as STR. What you are doing here (lease + STR) is commonly known as rental arbitrage, ALOT of STR hosts do this. If you do a search on rental arbitrage, you should find a wealth of information on this and what to look out for. 

The lease + option is a contract for a set period of time. There is usually a downpayment/ deposit required to make the option contract valid. This amount is something to think about. Technically it can be as low as $1 and as high as the two parties agree to. 

For Cabin renovations a good budget would be 15k-20k for each. Run the numbers to determine your all in costs and then how you will come up with the money. Also, be sure to factor in the holding costs while renovating and getting the properties rent ready.

Yes you should get a warranty on your rental. I also use property management companies for my rentals. When I filled out the intake sheet to have the property managers run my properties, both asked for information on the home warranty provider.

It's definitely worth it and not too expensive considering what it gets you.

I heard a saying that sticks with me

"the best time to invest in real estate is yesterday.. the second best time to invest in real estate is today"

The market may be getting saturated but I think as long as you can make the numbers work you should pursue the deal. Be very sure of your goals for STR and that your numbers are conservative.

If your goal is appreciation think about your timeline. If your goal is cashflow, use conservative numbers. Also look into any regulations and HOA regulations that could affect your HOA.

With the markets cooling I'm seeing a lot of price drops in markets I'm tracking. So you should be able to get some good pricing.

Quote from @Bruce Woodruff:

Quote from @Dale K Poyser:

Quote from @Bruce Woodruff:

Quote from @Dale K Poyser:

@Bruce Woodruff a lot of cities are cracking down hard on STR and it's also getting pretty competitive.

True, but a lot aren't and there are always areas where the trend has not gone crazy yet....plus this recession will weed out some of the newbies and wanna-be's.....

True, I think that is one of the reasons I also think MTRs have been around for a while and is a nice happy medium between LTR and STR. I'm by no means an expert, but I have been following the space and see a lot of cities cracking down.

I would find a city where STRs are doing fine and start there. More $$ to be made and easier on the property overall to have it cleaned once or twice a week instead of every few months....

I agree that is a good start but I have seen that a lot of those "good" cities are enacting new laws to crack down on that. I would definitely like to get into the STR space. But I do see a list of reasons on why MTR is a better option.

 

Quote from @Bruce Woodruff:

Quote from @Dale K Poyser:

@Bruce Woodruff a lot of cities are cracking down hard on STR and it's also getting pretty competitive.

True, but a lot aren't and there are always areas where the trend has not gone crazy yet....plus this recession will weed out some of the newbies and wanna-be's.....

True, I think that is one of the reasons I also think MTRs have been around for a while and is a nice happy medium between LTR and STR. I'm by no means an expert, but I have been following the space and see a lot of cities cracking down.

@Bruce Woodruff a lot of cities are cracking down hard on STR and it's also getting pretty competitive.

Congrats - will you be self managing?