I did the same thing the end of the year AUG2015. Lease To Purchase is the WAY TO GO. I know I'm going to hear flack from people who don't understand it the way I DO.
Your are renting it, Lease, but you give them the option to buy at a later date.
You promote this property as a RENT-TO-OWN. They pay a large upfront Payment to you. For easy numbers we will use $5k. This could be more or less depending upon what you feel. This Is NON REFUNDABLE, and is taken off the purchase price if they ever get financing and buy the property.
A Very minimal amount monthly from the rent (paid on time) is also removed from the purchase price if they every decide to buy. lets say $75-$125 a month. I'm not sure of your situation or how much equity you gain every month from mortgage payments.
They have the option to renew every year, and just continue renting.
Since they are Renting To Own, Tenant is responsible for all Maintenance and Repairs. That should save you some money.
No need to fix anything.
You place a floor on the purchase price. Basically what is it worth now? Then put in the contract that, the purchase price will be determined by an appraisal when they get financing, down the road. This means if they get financed from a bank in 5-10years, you gain ALL of the appreciation, but if the market goes down, your secure in knowing it won't sell for less than you want per your contract.
MOST PEOPLE never get financing... They usually move on after a few years. I usually save $1,000 they can have if they give back the keys and i can do an inspection to make sure everything works.
Don't fix it back up... just find a new tenant. Rent To Own. Have them put in new carpet and paint and have them save the receipts and report them to you during the first 30 days. They can make it look like they want to. You can take the amount they paid off the purchase price, and take an upfront payment like before.
These people would be new tenants at a higher rent rate due to the years that have gone by. More cashflow. Also you can get an estimate of your property and use it for the new floor purchase price.
Tenants get pride in OWNERSHIP and take better care of the property than an average tenant. If you ever do sell, you would have made all that cashflow, and gained all that EQUITY in the property from payments EVERY MONTH, as well as APPRECIATION, and you get it at appraisal price.
Single Family homes are priced by similar homes sold, not because you spent and extra $5k on the bathroom. They go by house size and bedrooms and baths, and year built, ect... see COMPS.
Anyway this solves all the problems with being a landlord. Hope this helps.
