Rent to Own

[DavidKilgour]

Any suggestions for Rent to Own in a 55 yrs + link home condo development? My father has been trying to sell with/without a real estate agent and no luck. He's been approached by a potential buyer who has suggested rent to own. I am a beginning investor with a four plex and tri plex but no experience in rent to own.



Does anyone have any recommendations on a rent-to-own contract template he could use? Are there any general tips one might provide so I can help my father out?



Thanks



David

 

[Sherilynn]

Contracts will vary depending on the province. You may want to consider buying Barry McGuire's "Deal Ready Documents" home study course. (Excellent contracts and cheaper than getting a lawyer to draft them.)



Key points:

• get absolutely everything in writing and be very detailed about all of the what-if's. For instance, what if the tenant decides not to buy or cannot qualify at the end of the term.
• pay the money to have a lawyer review the contracts, and insist that the buyer does the same (or at least signs a form stating that they have been advised by the seller to seek independent legal advice). Be sure that your lawyer has experience with lease options.
• get as large of a deposit as possible and make it mostly non-refundable. This is the seller's security that the tenant-buyer will stick to the contract and will be less likely to bolt.
  ask the buyer to submit his (and his wife's) credit reports with scores and review them. Credit issues in the past may not be a problem, but if the person has shown no improvement or has a load of debt in collections, just say "no."
  also be sure to check that the buyers have a good chance of qualifying with the bank at the end of the term by checking on their gross income and debt payments. (Mark Loeffler's book "Investing in Rent-to-Own Property" does a great job of covering tenant/buyer qualification)

Lease options are an advanced strategy and should not be entered into lightly.



If you have specific questions, feel free to email me at [email protected]