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Updated over 6 years ago, 03/27/2018

User Stats

70
Posts
36
Votes
Peter G.
  • Real Estate Investor
  • OKC
36
Votes |
70
Posts

Rent to own Landord? Good or bad?

Peter G.
  • Real Estate Investor
  • OKC
Posted

I have one of my friends that is going to be looking to rent to own in a few years and I was considering being the RTO landlord for that. I have never done a RTO and was wondering what thoughts people here that have done RTO before?

Do you typically pay to fix things like a traditional landlord or does the tenant? What if they dont have the funds to make repairs for example a new roof or a new water heater etc. 

Thanks, 

Peter

User Stats

1,489
Posts
1,023
Votes
Alex Deacon
  • Investor
  • Pittsburgh, PA
1,023
Votes |
1,489
Posts
Alex Deacon
  • Investor
  • Pittsburgh, PA
Replied

@Peter G. we do some here in my market. We let the tenant be responsible for all repairs and you want to get a good down payment or option deposit from the buyer. Have an attorney draft a lease option agreement for you or get one from a local expert. 

User Stats

165
Posts
258
Votes
David Wandel
  • Real estate investor
  • Pasadena, MD
258
Votes |
165
Posts
David Wandel
  • Real estate investor
  • Pasadena, MD
Replied

We have done a few. Only once have we had someone actually purchase the property. Our agreement says that they are responsible for any repairs under $1,000.

I would not do a RTO with a friend. If they don't end up purchasing in the end and you keep their option money there probably will be hard feelings and may lose a friend.

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1,141
Posts
1,140
Votes
Jeff Filali
Pro Member
  • Rental Property Investor
  • Broken Arrow, OK
1,140
Votes |
1,141
Posts
Jeff Filali
Pro Member
  • Rental Property Investor
  • Broken Arrow, OK
Replied

I wouldn't ever recommend doing this with a friend, its business and could end the friendship. 

Another option is to require them to purchase a home warranty. Usually cost around $50 mo and covers a lot of repairs, there are additional servicing fees similar to deductibles, but at least they don't have to come up with $5K to replace the HVAC, etc.

  • Jeff Filali
  • User Stats

    70
    Posts
    36
    Votes
    Peter G.
    • Real Estate Investor
    • OKC
    36
    Votes |
    70
    Posts
    Peter G.
    • Real Estate Investor
    • OKC
    Replied

    Thank you all for your reply's ruining the friendship is what i was most concerned about with RTO. I will think on it more.