I am wondering if this idea might work. Maybe you have tried it or know of someone else who has tried it.
Let`s say I buy a condo for $250k and get an 85% mortgage with a monthly payment plus condo fee plus property taxes total of $1675. My investment is the down payment plus closing costs plus two month`s expenses for a total of $43,000.
How reasonable is it to expect to find a `rent to own` buyer who is willing to pay a rent of 1.1 x $1,675 = $1845 per month in order to benefit in 40% of the appreciation over 3 - 5 years? At 5% appreciation, this would be a benefit of $21,000 over 3 years or $37,000 over 5 years (I`m including 40% of the principal reduction).
Then, could I reasonably expect to sell 60% of MY share of the appreciation and principal reduction over 3 - 5 years for $43,000 if the buyer would realize a profit of $19,000 over 3 years or $3,000 over 5 years? Annual Rate of Return is approximately 15%.
Next, once I have sold 60% of my position in this deal and recouped my cash investment, would a lender look at my 1.1 ratio of income over expenses and allow me to qualify for another property like this?
FYI - the monthly cash profit of $167 would be mine.
And finally, would you know if any of the rent could be attributable to `prepaid down payment`?
Thanks in advance for any help on this.
Let`s say I buy a condo for $250k and get an 85% mortgage with a monthly payment plus condo fee plus property taxes total of $1675. My investment is the down payment plus closing costs plus two month`s expenses for a total of $43,000.
How reasonable is it to expect to find a `rent to own` buyer who is willing to pay a rent of 1.1 x $1,675 = $1845 per month in order to benefit in 40% of the appreciation over 3 - 5 years? At 5% appreciation, this would be a benefit of $21,000 over 3 years or $37,000 over 5 years (I`m including 40% of the principal reduction).
Then, could I reasonably expect to sell 60% of MY share of the appreciation and principal reduction over 3 - 5 years for $43,000 if the buyer would realize a profit of $19,000 over 3 years or $3,000 over 5 years? Annual Rate of Return is approximately 15%.
Next, once I have sold 60% of my position in this deal and recouped my cash investment, would a lender look at my 1.1 ratio of income over expenses and allow me to qualify for another property like this?
FYI - the monthly cash profit of $167 would be mine.
And finally, would you know if any of the rent could be attributable to `prepaid down payment`?
Thanks in advance for any help on this.