How do lease options work in a smaller rural market? Say a town of around 30,000 people and many small surrounding towns of around 1,000 people?
Just curious if this strategy might work in this kind of market. I’m assuming that it can be profitable in any demographic market.
I think the real estate market is more a factor than the size of the real estate market. There may not be as many deals to be had, but what will determine whether or not homeowners are willing to deal will be decided by prices, supply and demand, the job market, etc.
I live in central Iowa and there are lots of houses on the market. Some folks have lost jobs due to companies closing but not a lot of this is going on where I live.
Everyone needs a place to live, some of those people want to be homeowners. This is the American Dream to some. If the deal is a deal to you and you can sell the payment/terms then a L/O will work.
IT will work in any market. There are just to many people that have bad credit that needs cleaning alittle but can make the payments. I’ve found that out myself. I have a list of buyer right now and it just amazes me. In the last 60 days I have put over 15 on my list. Get you one house and advertise and see what happens. Good luck.
The main area that it won’t work in, or at least very well,is in a market where rental rates are ridiculously low.
Such as, if a $250,000house rents for $900 in a given area, then it’s going to be touch to find people that will pay twice as much to rent to own.
Financially they are far better off just to rent in that market, not rent to own.
Pilot makes good sense here and I didn’t think about it simply because I really can’t imagine this happing anywhere because of the mortgage industry the way it is. I would have to ask the calif. investors this question. I have herd that there i are rent controls in that area of the country. Central southwest rents are just off the chart compared to 5 years ago. I love me job.
The average market rent for a SFH in our area (Central Iowa) is $500-$600. A home that rents for this amount is going to be a 2-4/bd house that was built in the early 1900’s. There really aren’t many newer homes for rent in my area.
I don’t believe there is a market for folks renting a really nice home for $1,000/mo. Every once in a great while you’ll see an ad for $900-1,200 but this doesn’t happen hardly ever. I’m guessing a home that rents for this amount would be worth $100,000-150,000.
$500-$600?! YIKES…I guess I don’t know Iowa…or even where the hell it is…North of TExas I guess…
I don’t jack with “buyers” unless they can do a solid $1k a month…
If a person comes to me for a $800 or less per month RTO, guess what?
They will almost never qualify for a mortgage…
Pilot – You should check Iowa out some time. Friendly people abound and it’s a great place to raise a family. The winters can sometimes be long. I know there are lots of folks that don’t feel like they need to lock their cars or their homes.
Are you suggesting that Lease Options or a rent to own strategy won’t work if market rents are in the $500-600 range?
If sellers with owner carry get $1000 per month in the Dallas area they are walking on water and a chance they will get the home back in 3 months. If they rent for $700 per month they have a long time tenant.
If Iowa has good beaches and strong rum…I’m there!!!
each area is it’s own area, if that makes sense…but here in the DFW area, $700 or below is basically Section 8 poverty, and all that comes with that.
After 9 years of LO’s, I’m turning down owners that have houses under $100k, (or about $1k a month) unless I know the area is nice enough I’ll get decent people.
When you move up in price…life is much easier. I’d just assume do $150k - $300k houses.
I agree. Section 8 is guaranteed money each month. Non section 8 is not guaranteed.
My rentals in the Dallas area go for between $1125 and $1250 a month