The few times i have done a rent to own on a 2 family i collect the rent on the other apartment and i put in a tenant if it comes empty. Keep in mind the buyer will be inexperienced at renting apartments and may put in the wrong person, if that happens they will just walk away from the deal and the apartment may be trashed.Also they may decide dealing with the other tenant is more effort than they want to deal with once they actually do it.Also if they descriminate against a possible tenant it will probably be determined they were your agent and you will get sued.How do you expect the buyer to close in a year if the sale price is higher than what it is worth? Banks will only allow rent credit toward purchase price for an amount they pay that is over fair market rent so keep that in mind when structuring the deal
Has anyone done a rent to own on a duplex? It rents for $750 a side, one side rented, one vacant. Could I charge someone $1500 and let them collect the $750 from the rented side? If so, then can I expect that them to find a tenant if the current one moves out before they purchase?
The duplex is totally renovated with garage, central air, etc. I was going to ask $139,000 which is about $10,000 over market and give them a one year option with a 20% rent credit and charge them a $3,000 option fee.
Do these numbers sound right? I’ve never done a rent to own before.
Barbara Doing a rent to own on a duplex is no different than a bungalow but you must not let the t/b collect the rent on the other unit. The biggest reason for this is that if the t/b decides to not pay the rent they have your $750. in their pocket every month and you have nothing. At least if you collect the other tenant you have $750.00 each month. The other reason is that with your non refundable option deposit of $3000. you will be protected for 4 months of rent. I never give rent credits towards the purchase. It is not generally necessary and most t/b’s never ask for it. They are usually people who cannot get a home any other way, otherwise they wouldn’t be coming to you. It is usually a credit problem. That is why you must insist on having the option deposit in cash before they move in.
Also make sure that you sign a lease and a separate option agreement and be sure to mark in the contract that for any reason the lease is cancelled, then the option contract is cancelled also. good luck