All Forum Posts by: Luke H.

 I would echo Chris above in that I would shorten the term and add upfront cost. But, should ask, what is the occupancy for the buyer?  primary or investment?  That is VERY important. 

@Luke H.

I would be very skeptical of appraisal at $250k and buying it for $120k.

On paper yes seems like not a bad deal but I wouldn’t do it because it’s five year term. I would do 12 month with extensions. Also would charge points at origination and bump the rate up a point or two

Reason being my guess is this borrower can it get conventional financing so they are a higher risk.

Trim the tree?

 You have not mentioned anything about the borrower. Understand you have great equity position but it is expensive, but more importantly  takes a lot of time and very distracting from other money making activities to foreclose. I never make a loan, no matter the equity position, that the past actions of the borrowers lead me to wonder if they will be likely to pay me back.  That is not everyone's thought process but it is mine. 

Rent to own is legal in Texas.  However the requirements of the seller/owner are onerous and the penalties for non compliance can be severe.  Additionally, if the buyer fails to pay, the seller's remedy for non payment can be having to foreclose or a timeline equal to foreclosure so there is really no benefit.  Here are some of the guidelines

 https://texaslawhelp.org/article/executory-contracts-and-lea...