Would you buy this SFH?

[Thomas Handy]

I found a 3br 1000 sq ft home with garage that an investor would sell rent to own for $75,000. No repairs are needed. The seller is asking for 3 or 5% down with monthly payments of $700 and he would finance the property. Could this be refinanced since the seller's rates appear to be above 10%? I'm looking to turn this into a rental and rents would be around $700 to $800 month. Would you buy this property?

Thx,
Tom

[Michael Lauther]

Thomas it appears that your investor may have priced the rent to own above market. Rent to own is a strategy that many investors use to lock in a profit and if the rent to own tenant fails to keep up the payments the owner gets to keep the down payment . Your anticipated rent is only 1% of purchase and your operating costs would be 50% of that on average. To qualify for a a refinance your property would have to appraise out at much higher than $75,000.

If the comps on the property turn out to be much higher than the 75k and you have good credit and a down payment than this can work but experience tells me that this property is priced retail or above.