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Updated over 4 years ago,
Seeking advice on a rent to own deal
This is the perfect place for advice so here goes:
I am relocating for work very soon, 3 weeks. I do not have time for the back and forth of listing my house and trying to sell it. I have only been in the house for 15 months so I have very little equity. It is a very unique property. It is almost 4 acres with a 3100 sqft house, 1200 sqft garage and 1500 sqft workshop. I bought the property last year in order to expand my side business. I overlooked a lot of little things because I only wanted the property for the land and workshop not necessarily the house. I paid 440k. A realtor I spoke to suggested listing at 475 and being prepared to accept 465 based on comps. If that's the case, the fees will eat up some of the money I put down originally. I also put 10k into the work shop for improvements. I am not afraid to rent out the property. I'm asking $2600 to include water and a pool cleaning service. I am trying to get the most money down in a lease option so I can buy another house where I am moving too.
What is a fair price on a 5 year rent to own? I was thinking a 4% increase in price every year to account for appreciation. Year 1: 483,600 Year 2: 502,944 Year 3: 523.061 Year 4: 543,983 Year 5: 565,742. I'd give the tenant the option to buy every 12 months at those prices based off 4% increase on original price of $465,000. I would give a rent credit toward the purchase price of $1,000 per month.
With 5k down and a $1,000 rent credit each month toward the purchase price, the tenant would end up having to get a mortgage for $466,600 after year 1, $473,944 year 2, $482,061 year 3, $490,983 year 4 and $500,742 year 5.
Do these numbers make sense, am I asking to little, too much? Not enough rent toward sales price, too much?
Thanks for any and all insight!!!