Lease to Own on Suited House

[jarrettvaughan]

I have a suited house in Chilliwack. The basement tenant is amazing and I want to keep her happy. The upper floor is for rent and I have been asked about a rent to own by a number of potential tenants. Are there any complications that I should be aware of that are unique to a suited house? Would the upstairs tenants manage the lower tenant seeing it is "their" own house (in theory) or would it be wisest if i continued to manage her as ussual (most likley the best option)?

Any advice is much appreciated!!!

 

[CargrenInvestments]

QUOTE (jarrettvaughan @ Jul 9 2008, 04:33 PM) I have a suited house in Chilliwack. The basement tenant is amazing and I want to keep her happy. The upper floor is for rent and I have been asked about a rent to own by a number of potential tenants. Are there any complications that I should be aware of that are unique to a suited house? Would the upstairs tenants manage the lower tenant seeing it is "their" own house (in theory) or would it be wisest if i continued to manage her as ussual (most likley the best option)?

Any advice is much appreciated!!!

Hi Jarret. Rob L here. While we are new at this as well, I would think that the simplist way (and possibly the only way) in a RTO situation would be for you to charge the RTO tenant the full rent for the property (for instance .0085 of property value or whatever your system is going to be) and let them manage the suite. If you want them to view this as their home and take ownership of it (responsable for upkeep, maintenance, etc) and also reduce the chance of them backing out of the option to purchase, I think this is the best way.

If rent is above market rent for their portion of the home, this is also a great way of making the RTO "affordable". You could probably add an addendum to the Lease Agreement stipulating conditions you feel are fair to the suite renter. I would think it is in the interest of your RTOers that she stays there long term and stable.

It would also cut down on your time/management required to deal with two different renters.

Just my 2 cents worth. Maybe more experienced investors can add to this (or correct me

)

 

[jarrettvaughan]

Thank you very much Rob, that info is very helpful.

 

[GarthChapman]

If the Suite is illegal or non-conforming there can be a significant risk in some municipalities to address - What happens to the deal if the municipality requires the Suite be `shut down` or requires expensive alterations to comply with Safety Code or Zoning Code requirements?

 

[BobHudson]

We don`t encourage lease options in a second suite or duplex situation. The tenant may come to depend on the second suite for income toward their own rent + rent premium. And if that secondary suite tenant moves out ...

 

[markl]

Hi Jarrett,

I don`t know if I brought this up when we spoke. But ensure that the tenant has enough income to pay for the whole property and the rent is a bonus. If they are without a tenant they will still have to pay the full price.

Regards,

 

[jarrettvaughan]

Thank you Mark, I appreciate you help.


QUOTE (markl @ Jul 12 2008, 06:07 AM) Hi Jarrett,

I don`t know if I brought this up when we spoke. But ensure that the tenant has enough income to pay for the whole property and the rent is a bonus. If they are without a tenant they will still have to pay the full price.

Regards,

 

[CargrenInvestments]

QUOTE (jarrettvaughan @ Jul 9 2008, 04:33 PM) I have a suited house in Chilliwack. The basement tenant is amazing and I want to keep her happy. The upper floor is for rent and I have been asked about a rent to own by a number of potential tenants. Are there any complications that I should be aware of that are unique to a suited house? Would the upstairs tenants manage the lower tenant seeing it is "their" own house (in theory) or would it be wisest if i continued to manage her as ussual (most likley the best option)?

Any advice is much appreciated!!!

Good morning, Jarret. Every one has indicated or stressed the danger of your main tenant depending on rental income from the secondary suite, but I am interested to hear their opinion on your original question/concept of rent to own for tenants in main part of house and you continuing to rent out the suite, managed by yourself.