Hi all,
I have had a chat with a duplex owner today here in Perth. In about 6 months time (when the current lease has expired) she is open to me taking a lease option for 2 years. I have done Rick Ottons "Rent to Own" Homestudy Pack but have not done a deal as yet. My questions are 1.) How is the best way / different ways to set this up? (my goal is to create high cashflow over back end profit.)2.) How do I negotiate prices (both in rent and end sale price with the owner) and be confident of making a profitable margin with my end buyer/tenant? Dont want to shoot myself in my financial foot…
To give you a clearer ideas of the numbers;
current rent $320 pw .owner says propertys value currently is $310,000 and are happy to sell for $330-335k under a 2 year lease option. After a very quick comparison online $310k seems about right (but will research more).
I know Rick says don't worry too much about the profit on the first deal just get the experience and system down.
Please feel free to offer opinions up here or PM me your contact details (I will respect your time and be VERY grateful!)
Thankyou in advance
Hey dorky
I'm a little confused about what you're planning here.
You seem to be planning on buying the property on a 2 year LO, and asking how to make money from it? I assume you're also planning on selling it on a LO as well??
If that's what you're planning, it's good that you aren't after much back end profit – because I can't see you getting any. If you're paying 6-7% higher than what the property is worth, that leaves you very little room to put the price up even further – even just to recoup your costs.
You could make the cashflow you're after if you can get away with only paying market rent to the owner. You could also negotiate a massive rent credit which you don't pass on to the person buying from you.I will tell you one thing though – the first LO I did was a 2 year period, and I couldn't get finance in time – even after renovating the house. That kind of sucked!
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