On this episode of The Most Dwanderful Real Estate Podcast Ever, to topic is Rent to Own deals and how to do them right. The concept of Rent to Own is not that different than Owner Financing from last week, but the distinction is that you retain ownership of the property with Rent to Own. You have your tenants in the property sign lease and option documents as well as an agreement specifying the terms of your deal, then you take a down payment from them that will become their option money later on.
If they end up not buying from you at the end of the agreement, that option money is yours to keep and you can turn right back around and start a new Rent to Own deal with new tenants. While Dwan has done plenty of these deals, she prefers Owner Financing more, and she explains that you might prefer different real estate investment options at different points in your life. The key is to just try a lot of different things to see what you like best and take Dwan’s advice by listening to the podcast and joining the membership site at Dwanderful.com.
By becoming a member and taking advantage of the 2-week free trial, you get access to the LIVE Coaching Calls every Wednesday, the Chat Box, and the Document Library which is a treasure trove meant to save you the money from having to create your own documents. Whether you sign up to be a member or not, you should absolutely go to Dwanderful.com/lingo to download your free copy of the real estate investment lingo so you know what you are talking about!
Time Stamped Show Notes
- 1:37 – Dwan checks in with you and talks about the gnats in Iowa.
- 8:47 – We are close to the end of the 2nd season of the podcast. Dwan reviews topics covered so far and talks about what is coming up.
- 11:34 – The difference between Rent to Own and Owner Financing is that you retain ownership of the property through the Rent to Own process.
- 13:14 – Rent to Own is also known as Lease Option, which means that the tenant is renting/leasing the property from you with the option to buy the house at a certain time. The terms are specified in the signed agreement, and the down payment they give you to begin leasing the property would become a part of their down payment towards purchasing the house outright or you keep it if they do not buy.
- 16:18 – With owner financing, they own the house and have to refinance after a few years to get the original owner off of the mortgage. With rent to own, you own the house and lease it to them. It is important to use two documents for this transaction: a lease and an option.
- 19:19 – You should be sure to sign any and all documents so you can get all of the tax write-offs that come with homeownership. But you are also responsible for repairs.
- 22:14 – Dwan always makes the tenant responsible for repairs under $250 in her rental agreements.
- 25:59 – At the end of your agreement terms, if they want to extend their lease, you should get another down payment from them. This would be the same lease, but a new option.
- 28:04 – You should be closing deals, and if you aren’t you probably aren’t a member of the Dwanderful.com site, where you can have access to all of the documents, LIVE Coaching Calls, and the Chat Box to directly ask Dwan questions.
- 30:01 – Dwan’s personal preference is to do owner financing rather than rent to own.
- 31:57 – The great thing about real estate investing is that you can figure out what you kind of deals you prefer, and it might change over time.
- 34:12 – Your assignment is to listen to this season again if you are interested in these type of deals and/or listen to season 1 about flipping contracts.
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