How do/Should I find a Rent to Own opportunity in Nashville?

[Cameron G.]

Hey all. I am just starting out, and have been looking to do a househack. The problem is my loan options are pretty limited since I am a full time student. A lender/friend of mine told me one method I should look into is a rent to own, which I also read about in Brandon's book. If I did this, it would simply be to acquire a rental property, not something I want to live in long term. I have a few questions, if anyone has some insight that would be awesome.

1. What is the best way to go about finding a landlord willing to set up one of these agreements?

2. If I could get a family member on board to put down the $ for a down payment [lend it to me to put down for some equity share], and get some kind of loan that is looser on the income requirements, would a traditional househack be a better option than the rent to own?

3. Has anyone tried a rent to own deal, and how did it go for you?

4. Is it typical for rent to own agreements to allow the rental payment to count towards the purchase price/down payment of the home?

5. For a rent to own, would multifamily 2-4 units be better to look for than single family, so that I can lease out the other unit/s while living there, or should I focus on cashflow after moving out [i.e. the long term].

6. I have also heard of doing one of these agreements but not living in it - I guess it's called arbitrage? Something tells me it would be a bit more difficult to find one of those deals, but has anyone had experience with something like that?

Thank you!

[Luka Milicevic]

@Cameron G.

1-There are very few. My recommendation would be to look at homes that are listed for sale and see if they want to do a rent to own deal. You will probably get a 99.99% no response as I know from experience when I was doing this a few years back. Outside of that you can do the same with listed rentals by asking if they would do a rent to own.

2-In my opinion, yes. Depending on the interest rate you gate from the family member or the % of equity they would take

3-Yes, several times. I tried selling a few that way and ended up getting zero interest as everyone just wanted to buy the house outright. 

4-There should most definitely be a portion of the rent going towards the down-payment. Beware that you will forfeit this payment if you end up not being able to purchase the house. (Depending on your agreement-but most are structured that way).

5-Doesn't matter. Single family works fine and will be less expensive. You can rent out the rooms. Either one would work. 

6-I would strongly advise against any arbitrage attempts. 

[Doug Pretorius]

@Cameron G. I've specialized in rent to own (RTO) for over 20 years and although I've never personally used it to househack it can work very well for that.

1. Best way to find them is to contact For Sale By Owner's, Expired Listings, and For Rent By Owner's (in that order). As @Luka Milicevic mentioned you can go for active listings, but the rejection rate makes it my last choice.

2. You can get a much better deal on an RTO than you can from any conventional lender.

3. Lots. And lots and lots. Both as the tenant/buyer and as the landlord/seller. I've made tons of money.

4. Everything's negotiable. Sellers are typically more willing to give a discount on price over a rent credit of similar total value and that's better for you because it means you have instant equity instead of having to build it over time. There are also a lot of nasty financing laws that make rent credits tricky.

5. You can do multifamily or single family and rent out rooms. Single family will be easier to find because there are a lot more of them and cheaper for everything from payments to maintenance, also easier for a new investor to handle.

6. In the case of RTO it's just simple subletting and yes I've done it many times.