rent to own

Hey Matt,
Great work picking a strategy. Let's get it to work for you.

So. If you set up a rent-to-own deal, this is basically what you've done:

1) Gotten a qualified tenant to give you a NON-refundable option fee. This amount will eventually be deducted from the final sales price that you have agreed upon. Until then, this NON-refundable option fee goes into your pocket. If they leave for whatever reason (you said that they can't get financing in your example), it doesn't matter and the fee stays in your pocket.
2) Gotten that qualified tenant to pay a monthly rent. This rent will provide cash flow every month. You can often charge a little bit more than market rent and credit a portion of their monthly rent toward the final sales price that you have agreed upon. If they leave, all that cash flow up until the time they left, is yours. Pocket it.
3) Given them a fixed amount of time (amount of option time) to secure financing and cash you out of the deal by paying a price that you agree upon before day one of renting. This fixed price must take into account what YOU paid for the property, as well as the non-refundable option fee and monthly rent credit, so that you can still secure a profit AFTER all those credits are given. If they leave, obviously you will never see this back-end profit, but who cares?

What do you do?

Get another qualified tenant-buyer in there. Rinse and repeat. Obviously, you don't want to put someone in your place that has absolutely no chance of getting financing. In fact, you might even hook them up with a credit repair specialist and a mortgage broker to help expedite their ability to secure financing. You'd really add value to those people's lives and it would really make you feel great about securing profit while helping somebody get a home.

Now go get it.

Thanks for all the great advise,what I was talking about was finding a property in pre-forecloser and I talk the owners into a lease purchase,I dont own the property,do I find another tenant to pick up where the last tenant left off or do I start the deal all over again

Matt

Yes you can do it that way also, inotherwords what your telling me is the home owner is behind on payments and wants out, then offer to take over the payments, and find a tenant to LO to, use part of the down pmt to get the bank payment on the house caught up to date, to avoid foreclouser and and contiune as before, get the tenant ready to purchase the house down the road, say a year or two., Make sure theres some equilty in property also well help, even thought this well work with out that, it never hurts. You dont want the property to be upside down., within a couple of years down the road the property will increase in value say 3-6% etc. Its workable just keep the numbers working, remember you make your money when you buy, not when sell, good luck with one........

To who ever knows the answer...

When you do a AoC.. you can put an exit strategy of 14-30 days if you cannot find the buyer...

What happens if I LO a house... and I look for a tenant.. and cant find one...

Is there a way OUT of MY LO?

Thanks

Tom

I would set up the time to be 60 days to find a good rend to own buyer, you can write this into the contact, and even get and agreement about not paying rent to the owner til you have found a rent to own buyer,. some people like 3 year L/O others like 5 yr L/O terms, its just what ever you and the owner agree to., yes the out is remember you dont own it, you just control it, you can walk away any time.

you will always get better terms if you make your trigger point quicker. I make the trigger point from the day I sign the agreement because I never offer on a home that I don't have an exit strategy built in.

"yes the out is remember you dont own it, you just control it, you can walk away any time."

What are your grounds for breaking the lease with the seller?