Yeah ... damn we'll become a rental country. Imagine how that will change financial/social dynamics:frown:
Two kids
Little Billy: Aha you live in a rental and your momma's an alcoholic:biggrin:
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still flipping houses and making money?
- Thread starter queenlives
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Yeah ... damn we'll become a rental country. Imagine how that will change financial/social dynamics:frown:
Two kids
Little Billy: Aha you live in a rental and your momma's an alcoholic:biggrin:
SteveNY or others....
Curious on your thoughts. I've rented out a 1/2 dozen condo's for year's, but I am thinking of doing Lease/Purchase Options
In this scenario, what terms would you require?
1) Currently offering annual lease for $1300...F.L. and Security. (I pay the association fee)
or
2) Sale Price $168,000, $316 association fees (covers insurance, cable, lawn care, pool care, etc.)
Initial Deposit required?
Lease / Purchase monthly payment?
Incidentally, my out of pocket monthly expenses are $1116.00, not including the huge tax shelter at the end of the year....
Curious on your thoughts. I've rented out a 1/2 dozen condo's for year's, but I am thinking of doing Lease/Purchase Options
In this scenario, what terms would you require?
1) Currently offering annual lease for $1300...F.L. and Security. (I pay the association fee)
or
2) Sale Price $168,000, $316 association fees (covers insurance, cable, lawn care, pool care, etc.)
Initial Deposit required?
Lease / Purchase monthly payment?
Incidentally, my out of pocket monthly expenses are $1116.00, not including the huge tax shelter at the end of the year....
I read your post twice and can't figure out if you are renting these to live in or if you own them and rent them out to other people? If you own and are renting them out to others are you saying you collect 1300 in rent and have 1116 in expenses?
Anyways, I have quite a few single family houses on lease option. We require 4k down and a monthly payment of 1k and security of 1k for a 3 year lock in option. Only 50 bucks per month from the rent go toward the purchase price. After the option expires the tenant can go to the bank and borrow the remainder of the purchase price minus the option payment of 4k plus the 50 bucks per month for however many month they have been their AND their rents has been on time.
Now what usually happens is they never buy the house and we keep the option payment. Also if they lease option they treat the house a little better while they rent it.
I have done almost exactly what you describe with maybe 10 total houses. and like you have found out many people just don't buy the house (their credit still sucks, they have grown in size and want a bigger house, etc...). I give back $50 a month (or I do an amortization table) towards the purchase price as well....
I think I have sold 5 houses to my original intended person. I lock in the price up front too so when they don't buy after 2-3 years the houses have mostly gone up in value so it is actually to my benefit that they walk away.
I have had a couple people half destroy the place though....not worth my time in court to chase them down either.......
Most "rent to own" landlords are dirtbags in my area....
I think I have sold 5 houses to my original intended person. I lock in the price up front too so when they don't buy after 2-3 years the houses have mostly gone up in value so it is actually to my benefit that they walk away.
I have had a couple people half destroy the place though....not worth my time in court to chase them down either.......
Most "rent to own" landlords are dirtbags in my area....
A quick amortization (guessing the taxes at $2400 per year on the condo and $500 for insurance) shows that you would be getting about 6.5% interest if you financed the entire $168k and they paid $1300 per month....
Is that what you intended? What are you paying right now?
Is the $168k the market price right now or what you think it will be in a year?
I gear my rent to own towards someone who has potential to buy. I price mine at the current market price (that way the renter gets the appreciation). but I also mostly bought my houses for a bargain so I was making "okay" money (not great money but decent - I have a full time job so I don't need to make a killing at this).
O ya.... you mention the huge tax shelter.... do not forget when you sell a property that has been depreciated that the depreciation recapture is at your current tax rates unless you do a 1031 exchange. The capital gains will be at the long term rates, but the recapture is at your current rate. Just so tax planning to prepare for.
Is that what you intended? What are you paying right now?
Is the $168k the market price right now or what you think it will be in a year?
I gear my rent to own towards someone who has potential to buy. I price mine at the current market price (that way the renter gets the appreciation). but I also mostly bought my houses for a bargain so I was making "okay" money (not great money but decent - I have a full time job so I don't need to make a killing at this).
O ya.... you mention the huge tax shelter.... do not forget when you sell a property that has been depreciated that the depreciation recapture is at your current tax rates unless you do a 1031 exchange. The capital gains will be at the long term rates, but the recapture is at your current rate. Just so tax planning to prepare for.
the houseing market is still really solid in western Canada (were I live).
Its not like two years ago where if you listed something for $285 you had five offers tripping over themselves to offer you $305...but things arent selling at much of a discount...the same $285 will sell for $281. Not a sellers or buyers market if you asked me...just a solid market.
I just finished flipping a house in BC last month and did very well on it, i plan to get into another quite soon.
Its not like two years ago where if you listed something for $285 you had five offers tripping over themselves to offer you $305...but things arent selling at much of a discount...the same $285 will sell for $281. Not a sellers or buyers market if you asked me...just a solid market.
I just finished flipping a house in BC last month and did very well on it, i plan to get into another quite soon.
couple factors:
- Insurance is included in the $316 association fee. This figure has tripled since hurricane Wilma came through a few years back....Insurance rates went through the roof down here.
- taxes have been $900. I expect them to go to about $1600 since homestead is removed.
- I used to live in this place. I refinanced it several times since the late 90's. I basically used it to aquire my stable of places. I have recently moved into bigger and better. Even breaking even with this place has helped me make $250k+ in rents and 2 flips over the last 10 years.
The selling market isn't moving in S. FLA. So, I was interested in leasing it for the next 3 to 5 years to avoid leaving 10's of thousands on the table with a quick sale. The lease / purchase options seem to be getting lots of interest. Calls on my leasing ads are generating these questions.
My thoughts were much the same regarding the outcome of the lease / purchase. Most people that would initially do the lease / purchase, walk away 2 or 3 years later.
I understand you keep the $50 per month (times) length they were there. Do you also keep the $4000 initial deposit for locking in at the current market price?
- Insurance is included in the $316 association fee. This figure has tripled since hurricane Wilma came through a few years back....Insurance rates went through the roof down here.
- taxes have been $900. I expect them to go to about $1600 since homestead is removed.
- I used to live in this place. I refinanced it several times since the late 90's. I basically used it to aquire my stable of places. I have recently moved into bigger and better. Even breaking even with this place has helped me make $250k+ in rents and 2 flips over the last 10 years.
The selling market isn't moving in S. FLA. So, I was interested in leasing it for the next 3 to 5 years to avoid leaving 10's of thousands on the table with a quick sale. The lease / purchase options seem to be getting lots of interest. Calls on my leasing ads are generating these questions.
My thoughts were much the same regarding the outcome of the lease / purchase. Most people that would initially do the lease / purchase, walk away 2 or 3 years later.
I understand you keep the $50 per month (times) length they were there. Do you also keep the $4000 initial deposit for locking in at the current market price?
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I usually only charge $2k for my deposits but yes i keep that. i tell everyone up front it is NOT a security deposit. it is a non refundable down payment.
Edmonton has been seeing some of the spill off of Calgary with the Oil economy. Calgary has been leading the nation in real estate gains. My house has gone up in value from $200K in 2000 to more than $650K last fall.
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Given current market conditions, I'm wondering how this discussion changes. I'm just wrapping up my second SFR right now. Market conditions aside, I had planned on taking a break until mid/late '09 before buying another. I'm trying to decide if that coincidentally makes me smart, or is this the time that I need to grow a pair and keep on buying. Anybody here that remembers the 30s?
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My mortgage broker reminded me of something today. The A paper jumbos on 3/1 or 5/1 arms are going to fail in 2010. These people have good credit, but the ones that put less than 20% down can't find anything to refi in to.
1) the value of their home has dropped
2) you need a real LTV these days...
All the unknowns have happened. All the knowns won't happen.
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