- Joined
- Dec 31, 2007
- Messages
- 101
Started doing rto's back in 2010. Found them to be a much more stable, predictable and much higher return (on cashflow) than my buy + holds. Flash forward to now..........what a range of outcomes.
One closed after 3 years as planned. One defaulted, did a midnight move on me and left their option deposit behind. one is still within their term
The other 5 are now past their term. Even beyond the 1 year extension provision put in the agreement.
Technically all of the options have expired and I have no legal obligation to sell and all credits are mine.
While I realize there is a considerable market of investors out there that look forward to that probability, I only got into deals I thought were winnable for the tenant. Realistic growth rate based on the area at that time and reasonable option payment and credits to get them there if they took care of their other issues
Here I am now with 3 year deals going into year 5 or 6, 2 year going into year 5, etc
They keep sending the same monthly payment. But there is no option in place.
A few of these are in areas that are now appreciating far better than the rates for the initial term
2 questions
1. If and when they try to buy back, how do you establish a new price? they shouldn't benefit from the hot market that came after the deal actually expired. I'm not trying to be greedy, but there is a lot of equity on the table. One tenant just failed to exercise an option price 60k below bank appraisal
2. When do you actually tell them enough is enough?
One closed after 3 years as planned. One defaulted, did a midnight move on me and left their option deposit behind. one is still within their term
The other 5 are now past their term. Even beyond the 1 year extension provision put in the agreement.
Technically all of the options have expired and I have no legal obligation to sell and all credits are mine.
While I realize there is a considerable market of investors out there that look forward to that probability, I only got into deals I thought were winnable for the tenant. Realistic growth rate based on the area at that time and reasonable option payment and credits to get them there if they took care of their other issues
Here I am now with 3 year deals going into year 5 or 6, 2 year going into year 5, etc
They keep sending the same monthly payment. But there is no option in place.
A few of these are in areas that are now appreciating far better than the rates for the initial term
2 questions
1. If and when they try to buy back, how do you establish a new price? they shouldn't benefit from the hot market that came after the deal actually expired. I'm not trying to be greedy, but there is a lot of equity on the table. One tenant just failed to exercise an option price 60k below bank appraisal
2. When do you actually tell them enough is enough?