All Forum Posts by: Zac P.

My question is for the people that work a lot in the "rent to own" part of real estate. I love the idea of giving people the option of home ownership. I also like the idea of getting a sizable option deposit, receiving rent and transferring maintenance to the tenant buyer. I had a few questions.

How much do you usually charge for the option deposit? I've heard 5% of the purchase price is around the norm.

Do you transfer 100% of maintenance to the tenant buyer? If not, how do you work this out?

Do you typically get full asking price on a "rent to own" home?

Do you raise, lower or keep rent where it is at when the "rent to own" starts? What % if any (of the rent), do you apply to the purchase price?

I know the eviction process varies state to state, but I've heard the eviction process in a "rent to own" situation can be tough. What's your experience with this?

When a tenant can not purchase the home at the end of the term and forfeit their deposit, do they typically stick around and continue to rent, or do they typically just move out?

What are some of the major challenges that you deal with in this business?

I know I have a lot of questions to ask a legal attorney. However, any helpful info from any of you all that do this would be greatly appreciated!

Do you allow this? A tenant of mine wants to transfer from her 2 bd apt to my 3 bd house. I really like her and want to treat her well, but se is halfway through her lease term right now. I would be ok letting her transfer, but I would want her to stay in her apartment until I could find someone to move in right after she left. Also, she would need to cover my cost to repaint and clean ($250). Normally I don't do this, but this could work out well. My house is currenly being rehabbed (just bought it).

Guys, your criticism is helpful and I take it with an open mind. However, with all do respect, my original question in this topic was how to structure these deal(s), not discussing why this might not be a good deal for the person financing. I know there is a ton of risk for someone fronting me $$$, but I already have someone in place to do this, I just want to see how you guys might structure this. Thanks! :)

@Bill Gulley I have run into that before with funding on appraisal amounts. Thanks for the input.

@Account Closed Thanks, that was helpful. However, I don't understand why it would be such a "bad" deal for my investor. My financier/investor is not a real estate investor and can not do this on his own. So he really needs someone like me that knows how to do this. So if that financier was you, wouldn't you rather do this at 10% interest than the bank for 1% (if that)?

@Account Closed @Bill Gulley @Roy N. Ok, sorry guys, my math sucks. So here is the breakdown that I got. Obviously there will be other fees, but to make everything easier, I'll skip over some of those. So in general, does this sound correct?

So I refinance the 30k house with a bank for 60k.

Lender wants 20% down which is ($12,000)

Bank will fund the other 80% which is $48,000

I pay off my investor his $30,000 and I pay my down payment of $12,000

That totals $42,000... So I get a check for $6,000 at closing?

Obviously there are issues that I need to check on and other costs, but man, how sweet would this be?

@Bill Gulley On the refinancing side, if a house is bought and rehabbed for 30k and appraises for 60k, then I shouldn't have any trouble right?

Ok, this might be a really stupid question here... So an investor puts 30k in (includes rehab) to purchase a house. I refinance the property a year later with a bank. The appraisal comes in at 60k and the bank will finance it for that. They require 20% down. That means The bank is funding 40k (of the 60k), but the investor put 30k into it... That's 10k left on the table... Would that mean I just need to inject my own 10k into the deal upon closing with the bank? I feel like I am missing something here or not fully understanding it.

@Duncan Taylor

@Duncan Taylor Thank you for the contact. Have you used them before?

@Bill Gulley Yes, that's what I want and I have the cash financier in place. Now, how would you structure it?