– Will it Cash Flow?
– Is it in a city with current and expected growth?
– Does it look like the property will appreciate?
– Can I turn around and easily sell it if the Rent to Own falls through? (ie..is this the kind of place that the general population would want to buy?
The ideal RTO, from my friend Bernie’s perspective at Rock Star Real Estate is a nice starter family home in a nice neighborhood within a decent size city.
“The other factor, is that in order for an RTO to work you would want to have a decent appreciation built into the sale price. We typically put in 5% compounded each year. The three year sale price is agreed upon up front by both parties. If the property’s actual appreciation does not match this agreed upon price, it is difficult to complete the purchase without having the buyer kick in more down payment at time of purchase.”
Having said all that, there are times when the situation dictates a need for creative thinking and this property in Mattawa may be one of them. If the offer to rent the property doesn’t attract a renter there are a number of things you can do to sweeten the deal. An RTO is just one of them and here’s why I think it is a good one.
From a renter’s perspective building a business on a property you rent is seldom a good plan. The property owner can change the agreement as soon as your lease is up and then where will you be? With the right RTO agreement everyone can come out a winner.
The business builder secures the agreement with money down. This can be a sizable amount. The buyer may have a pocket full of cash from the sale of their own property. The rents can be a little higher. The property is now occupied by an investor with something to gain if things work out in the business so they are more likely to make improvements than they are to neglect the property. And last but not least if things don’t work out for the business builder at the end of the lease you get to keep the down payment and the property.
If you choose to go in this direction I can help. I can provide everything you need to execute a successful rent to own from scripts to forms to successful sales letters.