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Updated over 6 years ago, 03/27/2018
Rent to own Landord? Good or bad?
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
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.
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.