Is Anyone Renting with Option to Buy on $100,000 + Homes??? Is there a good market for Rent to Own home in the $100,000 - $150,000 range???
Depends on your area. 100K house in a small town would be a nice house. 100K house in California is prolly not in the best condition.
I live in a small midwest town. The majority of the rentals in my area are 70k -90k homes. I was wondering if there was a rental market for more family type homes???
To rephrase the question for me. What are the best properties to lease/option? Can you l/o higher end homes?
Stick to the bread and butter properties. 3 Bedroom 2 bath, stay away from the rough neighborhoods.
You can L/O or wrap any property at any price level. For every home there is a buyer. If 100K is high in your area then you might have a harder time finding a tenant/buyer but it should happen eventually. If folks are leery of L/O then you could offer it on a wrap with a 5% dp and an adjustable rate starting at 7.9% increasing 1% per year to cap out at 11.9%. That should provide ample motivation for the buyers to refi the house into their own name, get you cashed out and get the mortgage holders off the hook.
I have several single family homes in Scottsdale; which is pretty much high-end everything! I signed a renter a year ago with first right of refusal for him. This house is comp’d at $580k. I told him I want to sell and offered L/O. He thought it was good idea and could buy at end of year. Solid income renter, but a bc on his credit report forced him to rent. $10k option fee, rent bump of 10%. I could sell thru agent but I’d lose 5%, and market is topping there, so I lock him in now, along with $180k in pre-tax profit. I think it’s crazy to pay 2200/mo rent, but in some markets, that’s what works.
I rehabbed a place here in Milwaukee and after several months of trying to sell thru agent I took out my own ad for L/O. Single family listed at $135k. They came in droves all wanting the L/o, but NOBODY could qualify. Most were low-income renters with bad credit and bc’s. Send a few to lenders but no luck. PLUS, my agent would have gotten a pop on the option, so in hindsight I’m glad it didn’t work out. Again, different markets, and I’ll try it again on next opportunity especially with markets getting soft.
If folks are leery of L/O then you could offer it on a wrap with a 5% dp and an adjustable rate starting at 7.9% increasing 1% per year to cap out at 11.9%. That should provide ample motivation for the buyers to refi the house into their own name, get you cashed out and get the mortgage holders off the hook
Austingal, I’m wondering if I can use the above example for my situation: I’ve got a newly built home that I’m hoping to LO in CA. My loan and cash investment so far is $470. The current value is about $490k with an assumable loan at $2500/mo, piti, hoa. There’s a one year prepayment penalty that expires 12/06.
I haven’t found anyone to put up the $10k LO deposit and pay $1700/mo on a 1 year LO. I’m thinking the purchase price will be $515k in a year.
If LO’ing doesn’t work out, how do I do what you mentioned above given the loan type (option ARM) I’ve got?
Thanks in advance
TruChoice, I am in CA and am in the process of renting to own a brand new home for myself but is in the $600K’s range which is the norm here in my area :-[ And yes, there’s an unbelievable market here for RTO (speaking from experience) specailly during Christmas.
I can’t wait to move into my new home in March!!
Lease optioning high end properties is definitely feasible. I bought a $2.6 million property subject to with a partner. 11,000 sq.ft. 5 car garage, elevator, pool, etc… We struggled to sell it retail, then offered it for sale on lease purchase. I had three buyers within two weeks.
Finally sold it under the following terms:
$9,500 per month
They have not missed a rent payment yet, and will buy the property in May