I know I've asked something similar in the past but I found someone who wants to do a rent to own option with one of the rentals. I've heard a lot of good and bad things for both sides of the party. Heard it's great since you don't have to do any repairs and don't have to worry about commissions but also that they can still fall through, tare up the place, can still make you do certain repairs, and try to get back the deposit. Have any of you had good experiences with this? Below are some numbers :

His credit 530

Income base 50k

Annual avg Commissions 15k

Has been with the same job 3 years

Has good rental history

Would get a VA loan (heard those AR ea lot more strict than traditional loans)

He is also going to have his brother and brothers 3 children residing

Would do 5k down, purchase price set at 320k next year(appraised value) , pay 1400 a month which is my mortgage.

Or I could just sell now lose close to 30k in commissions and fees but have heard rent to owns rarely go through.

I would pass on this prospective deal. Especially at 320K.

If the house is worth 320K, I'd sell now while the market is good. If you wait and try to get the last dollar, the market could turn.

If you still want to do rentals, try a lower priced market with your money from the sale. Maybe try a plex so an empty won't mean zero income.

That value for your place puts it at a level only about the top 10 or 15 percent can afford.

DO NOT do a deal with that proactive tenant. There's red flags ALL OVER IT!!

I have done several lease with option to purchase deals.

I don't know what the median price of your market is, so it's not an apples to apples comparison, but there is no way here I would to a lease with an option on a $320,000 house with only $5K down. I would be looking for a minimum of 5% or $15-20K.

I would also want his rent to be comparable to what his total payment would be if he were purchasing with a mortgage, which is well beyond $1400.

See if you can find a flat-fee agent. They advertise all over DFW-- presumably someone has a similar gimmick in your area.

Deal with a person who can buy it outright, get your money, and do something good with it. Don't drag it out.

Such a small amount of skin in the game means he gets a huge discount to stay there for 6 months without paying you a single monthly payment. If he were renting for 6 months you'd have $8k out of him.

The $5k downpayment might as well go straight to your attorney for the foreclosure paperwork that you'll be doing within 6 months. After you spend another $10-15k on repairs after he trashes the place you might be back to where you started from today.

John,

First blush - why only $1400 /mo for a $320K home? Sounds AWFULLY cheap to me. Should be closer to $3200/mo.

And you're only breaking even on the mortgage payment? What about repairs and vacancies etc?

He's not really a buyer, just an asker. He's pushing yoru GREED button to convince you to take him despite his troubles. He will not be a real buyer so don't put yourself thru the paces.

Either rent it for a profit or sell it. Generally speaking NOW is a very good time to sell.

We do rent to own on all our SFHs. Out of 1,000 RTOs *2* have gotten a mortgage and paid us off. Most leave for life reasons such as split or divorce.

Repair: some folks do some repairs but others leave the house because it needs so many repairs (that they did not do!) Now *I* have a big list at turnover. Aggravating but do-able.

In MY state, check YOUR laws, I get to keep every penny of their NON-REFUNDABLE OPTION FEE, making this business model very profitable. We use the RTO as a hook to get their attention away from normal rentals. It's totally their choice, I'm not forcing anyone, I'm giving them a CHANCE to pursue their dream when others turn them away.

BRAD

And another thing, a man earning $65k in his best year can not afford a $320k house. It would be lunacy on your part to go through with this.

Nothing that ANYONE has ever told you about Rent-TO-Own situations are true it it means less work, fewer worries or your not Completely Responsible to keep up the rental.

Rent-To-Own is just a "document, lease or agreement" subject to the courts interpretation. In many jurisdictions a tenant under contractor to purchase a property is an "Owner by Contract" and you can't just evict them for non-payment of rent.

Another...

I suspect he assumes like most that every penny of his payment goes to principle.

I agree with everyone else. NO, NO, NO!! RUN!

AND your thinking is VERY wrong:

>What is the definition of "rent to own"?

>I have done a successful Lease-Option before. Two separate sets of documents and transactions. (but NOT with someone in this situation)

>Insufficient income for the price

>Insufficient credit to get ANY loan in a year - or several

>WAY too little rent -you'll lose money every month, BEFORE repairs. You can't set the rent at just the cost of the mortgage! Do you intend to ever make money?

Please save yourself- hire a Realtor and sell it for retail now, while you can

His credit score is 530 and he has $5,000 to put down. And you are considering loaning him $320,000?

Do you even listen to yourself when you talk?

Most landlords wouldn't accept him as a tenant, let alone actually give him a house and hope he pays for it.

I am much more (pick one) easy, flexible, adaptive, compromising, etc., than most on here.

I would not have anything to do with this guy as a potential buyer nor as a tenant in a house this expensive.