I am thinking if I can get one of the duplex's units vacant, I might sell outright & take the capital gains hit. HOWEVER, since an owner-occupant may be a possibility, what about selling it LEASE-TO-OWN? I think I recall that the person pays extra monthly, which goes toward the purchase price? Can't recall the rest. I'm guessing the agreement has to be way more than a regular rental agreement. Does anyone know much about this topic or has done this?

So if your duplex is rented to A and B, you're willing to sell it RTO to A, who will eventually become B's landlord when ownership is complete?

In Texas, RTO has been used to prey on people, where a seller doesn't really want to sell a house, but wants to sell a house 15 times. Because of that, there are now strict penalties in play if you do it wrong, where you run the risk of losing more than the value of the house. So it's suuuuuper-important to know exactly what the rules are before you get into that territory. One of the biggest questions (if you did it here) would be, "When does the buyer accumulate enough of an ownership interest to the point that, if things aren't working out, you need to foreclose on a partial owner, rather than evict a tenant?"

If you genuinely want to sell your duplex once and be done with it, and go do something else with the money, let the bank take the risk, and don't mess with RTO. Around here, the only people who are interested in RTO are the people who have a 1% chance of actually being able to complete it successfully. Everyone else will just go to the bank and get a mortgage and buy it normally.

Deanna makes good points.

Find the post on March 24 "rent to own". this was discussed there.

You are correct that the paperwork is different. You would have a rental agreement that does not mention the option to purchase, and do not apply ay rent to the purchase. then you would have an option that does require fulfillment of the rental agreement.

And sooooo many more details.

Or, if you mean financing the sale - they would have the deed = foreclosure. And, why would you risk financing to someone who couldn't be qualified for a loan from a bank?

So, no - just don't.

Don't do rent to own.Too many problems.

If you are considering something like this just do a straight rent with a separate option to purchase within about 6 months. As above advice, nothing to the principal, Straight rent and option money which is not refundable under any circumstances. Also - set a time limit on the option, maybe 6 months and if it is not exercised the option either expires or the selling price is reset for another short term (with a new option payment) to the new current value at a minimum. Wanna be buyers will often try to drag the time period for the option out, often for years and then say the price should be the original agreed on price instead of current value which may be much more. Never give more than a few months before the option expires.

Also make them pay the property taxes and insurance. They usually WILL NOT do this unless you include it in the rent.

We are selling one as a "contract for deed". It's for 15 years. We rented to the man for 2 years at another property. He was nver late and took care of it. He found this property and wanted it, negotiated with us for amount he would pay, we negotiated to buy for a few thousand less than asking so we'd have a built in down payment. We closed on both transactions the same day.

We have another tenant that wants to do this but he is younger and has not shown quite the same stability. Since he and GF split he has been having trouble making the rent so how can he handle all repairs and taxes and insurance? I don't believe he can, even though I'd love to get rid of it, this is the one that is over the property line but we told him and he is ok with it because he knows the neighbors and knows it has been this way 25 years.

Lori,

I do TONS of RTO because MY Indiana state laws allow it. I am suspicious of CA real estate laws.

I MUST be done absolutely perfectly AND you are still renting/landlording. No less work but tons more risk. Evictions are still happening.

I think you might be falling into the do-gooder trap of "I want to help people with bad credit."

If the bank will not take a chance on them why do I think they will pay me better than their other debts?

Not everyone wants the American Dream of home ownership or is capable of LLing, esp in CA.

BRAD

My RTOs are most successful in my nicer places during a flatten or market edging forward slightly.