Do rent to owns work on older dated properties?

Debbie

Inspired Forum Member
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Oct 11, 2007
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Okotoks, AB
#1
I would appreciate input from someone experienced in rent to owns. I am wondering if the property I am looking at is suitable for a rent to own or if it would be difficult to find a tenant buyer because the property is dated although decent condition.

It`s a 1/2 duplex in Queensland, Calgary built in 1974. It is mostly original condition other than newer flooring. The kitchen and bathrooms are pretty much original other than a 3 piece wall surround put in main bath shower and a decent looking neo angle shower in basement bath and newer vinyl flooring. Bathroom vanities and countertops are ugly. Kitchen cabinets are older as well...the ivory cabinets with wood ledge pull at the bottom of each door and laminate countertop is not in great shape. Windows are original aluminum sliders and original furnace.
All the flooring is newer...3 years old and walls/paint is fine. Roof was done about 7 years ago. It looks not bad just dated.

The owner owes 245K which is about the market value and he is willing to seller finance so I was thinking of purchasing on seller finance and putting in a rent to own buyer.

Thoughts and comments greatly appreciated.
Debbie
 

ThomasBeyer

Senior Forum Member
REIN Member
#2
QUOTE (Debbie @ Apr 3 2010, 03:16 PM) Thoughts and comments greatly appreciated.
It works especially well on older properties proeprly priced !!

Most techniques taught in REIN do not work so well with new, fully priced homes but with older / smaller ones that cash-flow actually !
 

markl

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Oct 1, 2007
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#3
Hi Debbie,

Most of our RTO`s we do are on older homes. Although in Ontario we would consider 1974 somewhat new.

Why don`t you start marketing the property and have an agreement with the seller if you can find a proper tenant buyer you will take the property on your terms. But I would not commit until I had a tenant buyer. Is he marketing it another way? If so let him continue so that he is getting the most exposure.

What would the property be worth if you renovated or updated the place?

There is a lot of profit in buying fixing and rent to owning your flips.

If you can get significant upside in the property say $30 - 40k for a $10 - 15k investment it might be something to look at as well. As you can pass along the initial jump in price to the tenant as well.

Regards,
 

davepeniuk

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Nov 17, 2009
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#4
Hi Debbie,

I agree with both Thomas and Mark on this. Older homes will work, especially if you can buy creatively! Another suggestion you can try is getting a few pics of the property (with the Seller`s permission) and posting on kijiji, craigslist, any other well-viewed rental website and "test" the market. You can do all of this while you have the property under contract (but Subjects not necessarily removed). If you receive quite a few inquires (via email or telephone), that will give you more (or less) comfort that there is interest.

Finally, if the property shows well (is clean, fairly clutter-free, in reasonable shape overall), you can do a couple Open Houses as part of your contract with the Seller. Drive up demand by having several potential tenant-buyers all come at once. This is again, best done if the property is in decent shape and fairly clutter-free.

Good luck Debbie!
 

Debbie

Inspired Forum Member
REIN Member
Oct 11, 2007
85
9
8
Okotoks, AB
#5
Thanks Thomas, Mark and Dave for your great suggestions! Glad to hear a concensus that older houses are great rent to own properties.

Do you find that your tenant buyers do many updates or reno`s to the property before they actually purchase it?

Unfortunately this seller changed his mind at the last minute (had the appointment time set but the wife nixed the deal) and he is not going to sell right now, but will hang in there a few more months and see how it goes. Maybe he will call again in the near future.

Anyway I will keep these great suggestions in mind for the next deal that comes along.

Thanks so much for your help! I am working hard to figure out the rent to own system and greatly appreciate all the advice and tips.

Debbie