Help! Lease to Own

[antaynguy]

Hi gang,

I have not done a lease to own before, but are looking to start utilizing this method as an exit strategy. I have not been able to apply Quick turn method to secure a contract to buy a property yet. However, I do have a nice home in my portfolio that I would like to do a lease to own or owner finance. If I don`t have front end deal yet so, I might aswell try out the backend to practice when I get one.

The property was bought for 345000.00 1.5 years ago. City Assessed this year at 288000.00.
I am asking for price at the market value when the option is excercised with price no lower than 345000.00.

The property is vacant, and It has been beautifully renovated and staged.

Advertising so far for about 3 weeks:

1) Kjiji


http://calgary.kijiji.ca/c-housing-housing-for-sale-Rent-to-Own-Low-Down-Support-Your-Local-Charity-W0QQAdIdZ180392341


2) signs on the property

Callers so far:

1) 5000 down with refund coming in a couple of months and wants 1500 rent with 200 goes toward down payment.

2) second caller sticky on the price and want it reduced.

3) 20,000 down wanting monthly rent reduced and can`t move in for a couple of months.

4) 2000 down with refund coming in a couple of months and willing to pay 17000 rent with 200 goes toward down payment.


Are these suspects or prospect?
What about price range, is it ok or too high/low?
Are the number of calls typical?

Any expert out there can comment on the whole deal?
Any suggestions would be appreciated!!

Thanks!

 

[GaryMcGowan]

QUOTE (antay @ Jan 20 2010, 12:38 PM) Hi gang,

I have not done a lease to own before, but are looking to start utilizing this method as an exit strategy. I have not been able to apply Quick turn method to secure a contract to buy a property yet. However, I do have a nice home in my portfolio that I would like to do a lease to own or owner finance. If I don`t have front end deal yet so, I might aswell try out the backend to practice when I get one.

The property is vacant, and It has been beautifully renovated and staged.

Advertising so far for about 3 weeks:

1) Kjiji


http://calgary.kijiji.ca/c-housing-housing-for-sale-Rent-to-Own-Low-Down-Support-Your-Local-Charity-W0QQAdIdZ180392341


2) signs on the property

Callers so far:

1) 5000 down with refund coming in a couple of months and wants 1500 rent with 200 goes toward down payment.

2) second caller sticky on the price and want it reduced.

3) 20,000 down wanting monthly rent reduced and can`t move in for a couple of months.

4) 2000 down with refund coming in a couple of months and willing to pay 17000 rent with 200 goes toward down payment.


Are these suspects or prospect?
What about price range, is it ok or too high/low?
Are the number of calls typical?

Any expert out there can comment on the whole deal?
Any suggestions would be appreciated!!

Thanks!
Great looking ad and property !
What is the property value today?
What does the 1700 represent? how much will you credit towards down payment?
Try and look for a min 3% deposit.
When you refer to the refund, what does that mean. In our Rent to Own properties we do not refund anything. We do credit the tenant/buyer their original deposit and monthly credits as down payment when they exercise the option to buy.
Option 3 looks the best, but is it?
For a great resource check out Mark Loeffler`s book on Rent to Own

 

[markl]

Antay it is a numbers game. You have to plug in the numbers to figure out the return you want on the property and what also works for the tenant. No scenario works unless the minimum the tenant saves towards down payment is at least 6% in Alberta 5% down + closing costs.

next step get them to fill out an application work with your mortgage broker to help you assess the applicants and see who is suspect or is a prospect.

Other than that you need to determine the numbers that work for you. What would typical rent be on a property such as this?

Regards,

 

[gwasser]

QUOTE (antay @ Jan 20 2010, 10:38 AM) Hi gang,

I have not done a lease to own before, but are looking to start utilizing this method as an exit strategy. I have not been able to apply Quick turn method to secure a contract to buy a property yet. However, I do have a nice home in my portfolio that I would like to do a lease to own or owner finance. If I don`t have front end deal yet so, I might aswell try out the backend to practice when I get one.

The property was bought for 345000.00 1.5 years ago. City Assessed this year at 288000.00.
I am asking for price at the market value when the option is excercised with price no lower than 345000.00.

The property is vacant, and It has been beautifully renovated and staged.

Thanks!

Antay,

I loved your ad, but I wonder about your terms for RTO. I found that a house (125 Los Alamos Cr) - 4 level split with 1037 sqr feet and 3 bedrooms sold last July for 351K. It was build in 1999.

So, maybe you should have a closer look at your price. You`re selling after incurring renovation costs and you`re selling for the same price you bought it for 1.5 years ago?

The single family residential market in Calgary is heating up. When will the new renters take possession, i.e. when will the option be exercised? 1 or 2 years from now? Chances are good that the market will appreciate significantly over that time. So, at first glance you`re selling it below market value and you don`t even take into account that the place will likely appreciate between 6 and 10% before the option will be excercised.

Now, what do other places in the neighbourhood rent for. $1400 to $1500? Are you getting positive cashflow at these rates especially if $200 of the rent goes towards the downpayment?

Sounds like you setting yourself up for a ride. I would do some more research on your prices.

Hope this helps.

 

[markl]

I agree with Godfried on the numbers.

It can take up to 2 - 3 months to back fill a property with a proper RTO tenant and not just the person who shows up with the most down payment.

Just a note to Godfried the down payment savings for the tenant works into the appreciation factor. So essentially it is just a paper transaction at the end of the day.

Regards,

 

[antaynguy]

Thanks everyone for your insight and suggestions. I will have to go back to crunch some numbers.

I will also be putting up more street signs/spam in the neighbourhood to generate more leads.

Cheers!