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I have sold all but 4 of my rental properties. My plan, long ago, was to sell them all when I retired but the taxs and impact to my medicare premiums caused me to stop selling.
I charge reasonable rents and, except for one property, my tenants are very long term with no issues. My son manages my properties but he will be moving from the area in about 2 years. So….perhaps it will be time to sell in the next couple of years.
Two of my houses have just perfect tenants. Pay on time always, keep the places in great shape and each has resided in their homes for about 5 years. I want to give each the opportunity to buy their houses and would consider doing owner financing or rent to own arrangements. In fact, rent to own might help me delay tax impact.
Looking for comments of those who are familiar with rent to own arrangements. Good and bad, pro’s and con’s. These are houses in Texas.
I have sold all but 4 of my rental properties. My plan, long ago, was to sell them all when I retired but the taxs and impact to my medicare premiums caused me to stop selling.
I charge reasonable rents and, except for one property, my tenants are very long term with no issues. My son manages my properties but he will be moving from the area in about 2 years. So….perhaps it will be time to sell in the next couple of years.
Two of my houses have just perfect tenants. Pay on time always, keep the places in great shape and each has resided in their homes for about 5 years. I want to give each the opportunity to buy their houses and would consider doing owner financing or rent to own arrangements. In fact, rent to own might help me delay tax impact.
Looking for comments of those who are familiar with rent to own arrangements. Good and bad, pro’s and con’s. These are houses in Texas.
Don't do rent to own. Just carry a first trust deed or a land sales contract so they are the owners. I have helped set up several of these for people to spread out the capital gains impact and it has worked out well.
Depending on your age, I generally negotiate a 10-year balloon with the seller, with no prepayment penalty after 3 years, with a market interest rate, with a 30-year amortization. I would probably do a longer amortization if needed with current interest rates if the tenants needed help to keep the payment lower to make things more comfortable for them, but that would just depend on what they need.
Don't do rent to own. Just carry a first trust deed or a land sales contract so they are the owners. I have helped set up several of these for people to spread out the capital gains impact and it has worked out well.
Depending on your age, I generally negotiate a 10-year balloon with the seller, with no prepayment penalty after 3 years, with a market interest rate, with a 30-year amortization. I would probably do a longer amortization if needed with current interest rates if the tenants needed help to keep the payment lower to make things more comfortable for them, but that would just depend on what they need.
That’s exactly what I’ve done. I gave one a 40 year amortization with a ten year balloon. The others ranged from a 10 year mortgage to a 20 year mortgage to 30 year mortgages.
I have sold all but 4 of my rental properties. My plan, long ago, was to sell them all when I retired but the taxs and impact to my medicare premiums caused me to stop selling.
I charge reasonable rents and, except for one property, my tenants are very long term with no issues. My son manages my properties but he will be moving from the area in about 2 years. So….perhaps it will be time to sell in the next couple of years.
Two of my houses have just perfect tenants. Pay on time always, keep the places in great shape and each has resided in their homes for about 5 years. I want to give each the opportunity to buy their houses and would consider doing owner financing or rent to own arrangements. In fact, rent to own might help me delay tax impact.
Looking for comments of those who are familiar with rent to own arrangements. Good and bad, pro’s and con’s. These are houses in Texas.
Don't be surprised if they don't want to buy........
My sister had a tenant for almost 8 years, she pleaded with them to buy the house. Nope they wanted to be renters even when the mortgage would have been cheaper! She sold the house and they moved to another rental.
Don't be surprised if they don't want to buy........
My sister had a tenant for almost 8 years, she pleaded with them to buy the house. Nope they wanted to be renters even when the mortgage would have been cheaper! She sold the house and they moved to another rental.
Some people just see ownership as too much responsibility.
I have sold all but 4 of my rental properties. My plan, long ago, was to sell them all when I retired but the taxs and impact to my medicare premiums caused me to stop selling.
I charge reasonable rents and, except for one property, my tenants are very long term with no issues. My son manages my properties but he will be moving from the area in about 2 years. So….perhaps it will be time to sell in the next couple of years.
Two of my houses have just perfect tenants. Pay on time always, keep the places in great shape and each has resided in their homes for about 5 years. I want to give each the opportunity to buy their houses and would consider doing owner financing or rent to own arrangements. In fact, rent to own might help me delay tax impact.
Looking for comments of those who are familiar with rent to own arrangements. Good and bad, pro’s and con’s. These are houses in Texas.
I'm not a fan of "rent to own" agreements either. The way I see it, they've already been renting for 5 years and have built up zero equity.
If you think they are trustworthy, then offer to sell the property to them with a minimal down payment and you carry the balance (with interest of course) for 20 years with a 10-year balloon payoff. Of course, you will secure your interest in the property with a deed of trust or mortgage (whichever is used in your state).
However, don't be surprised if they REJECT this proposal from you. After all, WHY should they do it? Right now, all they do is pay a low monthly rent payment and you take care of EVERYTHING! Repairs, taxes, replacement of appliances, carpet, and HVAC as needed, and all that sort of thing are not their worry.
In fact, I would bet money that they WON'T be the least bit interested in buying the houses at the present time.
Here is what you might do to stimulate their interest in buying: RAISE their rent to FMV (fair market value) ASAP! Then wait a couple of months and offer to sell the place to them. It will sound like a better buy once their rents are raised to FMV. Plus, getting fair market rents will raise the value of the property in the eyes of the potential buyers if the tenants don't agree to buy the property.
In all likelihood, the tenants WON'T buy the houses unless you just agree to sell at give-away prices. But either way, you need to get your rents in line with the rental market in your area. Prospective buyers of the property won't fall for the line of "I could charge more in rent, but I don't want to do it to these nice tenants".
BTW, I've been there, done that on several occasions with rental properties that I owned.
Some people just see ownership as too much responsibility.
Or a constraint on flexibility.
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