Ever heard of the above strategy/book? Can you combine the lease-to-own wealth building concept with buy & hold to accelerate your accumulation of buy & hold properties or is this best used just for generating max. income instead of equity? A realtor in Oakville is selling this concept in Canada- what`s behind the curtain for him is he makes commissions when I buy properties so he may discourage buy&hold...
lease to own strategy
- Thread starter donksky
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I have never heard of the book. The strategy is sound many REIN members use it. The why is you can buy single family homes that cashflow in areas where SFH either don`t cashflow or just squeak by. As well you get the added satisfaction of helping somebody out of a tight situation by affording them a home of their own and you get a 3 year mainly hassle free tenant.
As for the realtor I would guess what`s behind the curtain is the same for us as we Assign lease to own properties. He gets to sell the property as well because of cashflow of the properties gets to work with a person who should have no problem qualifying for mortgages on future projects.
As for wealth building concept whatever is the right fit for you is what I would say you can do if you want to combine 2 strategies or just stick with one is up to you.
Have a look at our website you can see some of the numbers we use for RTO.
Regards,
As for the realtor I would guess what`s behind the curtain is the same for us as we Assign lease to own properties. He gets to sell the property as well because of cashflow of the properties gets to work with a person who should have no problem qualifying for mortgages on future projects.
As for wealth building concept whatever is the right fit for you is what I would say you can do if you want to combine 2 strategies or just stick with one is up to you.
Have a look at our website you can see some of the numbers we use for RTO.
Regards,
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I haven`t heard of the book, but do know that in our model there is nothing in it when we sell the property to the tenant/buyer. There is no need for an negotiation on price as that was decided at the beginning and there is certainly no need to get real estate agent help with the purchase transaction as it is all defined up front.
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If you do some research on lease-to-own stats you will find the majority of lease-to-own clients never compleat the deal. This is often due to the fact that they initially lease-to-own because they can`t afford to buy or have very poor money management habbits. They often fail to get financing in the end or decide they do not want to own the property and walk away.
What this means is you keep the property to re-lease and keep all there payments including principal.
Regardless of the reason it is still a win/win situation as you gave someone a chanse to own a house that would otherwise not have and the property makes you more money.
What this means is you keep the property to re-lease and keep all there payments including principal.
Regardless of the reason it is still a win/win situation as you gave someone a chanse to own a house that would otherwise not have and the property makes you more money.
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QUOTE (donksky @ Jan 10 2008, 08:35 PM) thanks very much, Mark & Bob - I can see that you use RTO strategies - I`ll study your websites/logs for the numbers/strategy.
I agree that the trend is for the tenant/buyer to not complete the deal. But in the model we use, there is strong encouragement for the tenant to complete the deal. Over the 2-3 years of the deal they can gain $20,000 or more in credits to be used only toward a purchase down payment. One of the ways we do this is by taking a good sized initial deposit, say $6,000 to $10,000 (depending on the value of the house) and this is only returned if they buy. Many, though not all, of our deals also have a $200/month incentive credit that encourages them to stay in the deal and pay timely rent.
That said, you are correct in that many of them do have money issues and sometimes get into trouble on the way through.
Our working assumptions when we started were that the `norm` is 50% conversion rate (eventual sale to the tenant) and we were planning for 70% or better. In the ten deals that I have worked in the past year and a half, one has gone to successful conclusion, one has gone to evicition, and one tenant just walked out. The rest are all still in play.
I agree that the trend is for the tenant/buyer to not complete the deal. But in the model we use, there is strong encouragement for the tenant to complete the deal. Over the 2-3 years of the deal they can gain $20,000 or more in credits to be used only toward a purchase down payment. One of the ways we do this is by taking a good sized initial deposit, say $6,000 to $10,000 (depending on the value of the house) and this is only returned if they buy. Many, though not all, of our deals also have a $200/month incentive credit that encourages them to stay in the deal and pay timely rent.
That said, you are correct in that many of them do have money issues and sometimes get into trouble on the way through.
Our working assumptions when we started were that the `norm` is 50% conversion rate (eventual sale to the tenant) and we were planning for 70% or better. In the ten deals that I have worked in the past year and a half, one has gone to successful conclusion, one has gone to evicition, and one tenant just walked out. The rest are all still in play.