# Rent To Own Investing



## Berubeland (Sep 6, 2009)

A few times we've had people ask about rent to own investing. I just read a book on it, it's a good investment strategy but I still don't like it. 

To read more http://landlordrescue.ca/rent-to-own-investing/


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## Sherlock (Apr 18, 2010)

I know you're looking at this from the landlord/investor's point of view, but what about the tenant/buyer, is this ever a good option for him? I can't imagine a single scenario in which it is.


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## jamesbe (May 8, 2010)

I went to a seminar about rto investing, I agree it seemed great for the investor and I started counting my money, but it seems predatory. 

The guy running the seminar did say he had done 10 deals and all had completed flawlessly so it seemed like he was ethical about it. But it was also all based on 5% per year growth on the real estate.


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## Berubeland (Sep 6, 2009)

No I didn't really see that it was ever good for the tenant/buyer from a financial perspective unless of course appreciation outstrips the 6 to 9% the book recommends. 

If the investor is ethical it can be ok but let's face it how many people do you trust when it comes to $20,000 or more to their benefit? 

I do see a use for this system but it never seems to be used for that... self employed people have an awful time getting a mortgage. Their "reported income" is usually low. There is a powerful incentive to under report income. 

Another application would be for commercial units which require huge down payments. 

As far as I know no one is using the rent to own system for these groups of people. The target tenant as far as I can determine is someone who is a financial idiot who has bad credit but good income. Someone who wants it all now instead of saving. 

Is it good for investors? Yes but at one point I see this industry being regulated.


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## Four Pillars (Apr 5, 2009)

Sherlock said:


> I know you're looking at this from the landlord/investor's point of view, but what about the tenant/buyer, is this ever a good option for him? I can't imagine a single scenario in which it is.


There are lots of scenarios where the tenant/buyer could benefit from a rent-to-own. 

There's nothing inherently wrong or one-sided about a rent-to-buy premise. The problem is that in reality, the deals are usually set up by and proposed by the house owner (or business owner in the case of rent-to-own tvs for example) and are one sided, because the owner wants to make money.

As Rachelle said, the takers on these deals are usually unsophisticated and can't/won't negotiate or shop around, which means the odds are stacked against them.


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## Berubeland (Sep 6, 2009)

The worst if the case scenario as I see it is that the renter puts up a part of the downpayment and money every month towards the down payment as well. 

The rent is usually higher than market rent. 

If the renter can't get financing they could be turfed out on their *** after the contract. 

Personally I'd be putting in some extension clauses in there along with "real appreciation or depreciation numbers"


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