Selling Home; Rent to Own

[arcticcat522]

Ok, so here is how my father is working the rent to own he is doing... the tenant is paying what equates to market rent as a mortgage payment to him. the payment, less 5% goes towards paying down the principal on an agreed upon purchase price. The homes title stays in my father's name until 20% has been paid off, then gets transfer and treated as a normal mortgage (held by my dad). During the whole time, the tenant is responsible for maintenance and repairs/property taxes ECT. Seems win/win no? Dad makes 5% on a few hundred grand, tenant pays no "extra" rent. It's like buying a place with 0 down. ( I think they gave him like 5k down) @ercchry what do you think? Also, essentially sold the place with no commission/reltor fees

[Buster]

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Ok, so here is how my father is working the rent to own he is doing... the tenant is paying what equates to market rent as a mortgage payment to him. the payment, less 5% goes towards paying down the principal on an agreed upon purchase price. The homes title stays in my father's name until 20% has been paid off, then gets transfer and treated as a normal mortgage (held by my dad). During the whole time, the tenant is responsible for maintenance and repairs/property taxes ECT. Seems win/win no? Dad makes 5% on a few hundred grand, tenant pays no "extra" rent. It's like buying a place with 0 down. ( I think they gave him like 5k down) @ercchry what do you think? Also, essentially sold the place with no commission/reltor fees

This is just a game of "where's the risk".

And there are a few risky things here.

[ercchry]

Uh... that’s not really like a rent to own that’s more like a vendor take back, or agreement of sale... not really sure how he is planning to transfer title without refinancing the property and becoming a guarantor, or co-applicate with the buyer

[arcticcat522]

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Uh... that’s not really like a rent to own that’s more like a vendor take back, or agreement of sale... not really sure how he is planning to transfer title without refinancing the property and becoming a guarantor, or co-applicate with the buyer

Ya, I guess this isn't a typical rent to own. But kinda is. I'm not sure what he would need to do to transfer the title. Isn't it just some paperwork? The property is owned outright. If he wants to transfer the title to the tenant, can't he just right up a mortgage? He will be the bank?

[ercchry]

If it’s free and clear, sure... but if it’s not then the mortgage company is in first position on title

Also risk will be insanely high if a lawyer doesn’t register your father’s interest properly once tenant is on title. If your father is willing to act as the bank, he should join a MIC... his returns will be substantially higher for the risk he is taking on

[arcticcat522]

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This is just a game of "where's the risk".

And there are a few risky things here.

You are right. I'm not seeing much risk since the property is a rental to begin with. I may be missing something and like to try and see things from others views. Knowledge is power. Hahah.

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MIC? For those who don't know?....

[ercchry]

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You are right. I'm not seeing much risk since the property is a rental to begin with. I may be missing something and like to try and see things from others views. Knowledge is power. Hahah.

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Mortgage Investment Company... aka a “private lender”... rates for first position on a property start at about 8% and go to close to 15%, plus a 1.5-5% fee (and a same size fee to the broker who brought in the client on top of that).

There is a reason though... high risk borrowers, and foreclosing is expensive, but also takes a special type of person as it can be very hard emotionally on people.

[masoncgy]

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People getting creative to generate sales/revenue on properties is my guess. After 90 days on the market i'm about to rent mine out, market sucks hard right now!

Then reduce your price if you really need to sell it. There's always buyers out there, someone will take it, but if you're 90 days on the market and no bites you either need to make the unit more attractive (paint, etc) or cut the price.

Three things sell a property: price, location, condition. Only two of those you can control.