Posted by Steve(NC) on February 01, 2001 at 18:30:04:
TRY not to confuse him too much.
Tell him that in order to buy it at some time that you would first need to rent it. You rent it from him with the right to sublet it to a third party.
You then hammer out:
1- length of the contract…usually 3-5 years at least.
2- Monthly payment that you will give him
3- purchase price (option)
There are other details but those are the major things to deal with.
You then advertise it as a rent to own…and you charge more monthly, more for a purchase price,a one year contract, and non-refundable option money.
Terms you have with seller
$700 month rent (with X rent credited towards purchase)
3 year l/o
$90,000 option/strike price
Terms you give to your tenant/buyer:
$800 month ($100 monthly cash flow to you)
1 year l/o
$100,000 purchase price
$3000 option money
After a LOT of other things are dealt with…you will get:
$10,000 minus the $3000 option money = $7000 minus any rent credits…when they buy.
There are a lot of other minor details that would be worked out but that is the basics of it and how it works.
You need the right to sublet and those 3 terms hammer out…and you should be able to make some cash.
Hope this helps.