Real estate investments and rent to own community service that makes sense

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Real estate investments and rent to own community service that makes sense
Do you have $10,000 give or take?
Do you want to invest in a sound vehicle that has some risk but won’t scare you?
Then think about this.
In my practice I run across potential buyers who are fairly good risks but have some dinks and dings in their credit or may lack down payment. One such individual that I’m working with now, is currently renting at a high dollar amount. She has a good job, which is steady and stable, she has good income. She is lacking down payment and her credit needs a little clean up. Here is what she is willing to do; she is willing to meet in an on-going fashion with my in house mortgage lender as an ad hoc financial counselor so that she stays on track. The (buyer) has a credit score of 648 (fair), she makes 61,000 per year; she works for the city of Durham. She is looking at a condominium priced at $199,900.
She and I are looking for backers who are willing to buy the property that she’s identified, own said property for three years and then sell said property to her. Here’s how it could all lay out…
In very broad strokes:
We would buy this property, we would then lease this property to her on a rent to own basis and in three years when her credit is completely repaired she would buy this property from us. I say we because I am willing to put in my money too. We would collect incremental profit monthly on the lease and at the end of the term in three years when the property is sold to her.
If we purchase for $199,900, and our mortgage is at a 5% interest rate, we put down 20% which is 39,980, and our final loan amount is $159,920 financed for 30 years; then our payment would be $858.49 principal and interest + taxes $186 + HOA dues $213= which is a grand total of $1257.48
We enter into a rent to own agreement with our future buyer. Her monthly rent could be $1800, less $1257.48 our monthly expenses which leaves us with $543
We apply $200 from that $543 toward her down payment, at the end of three years she has $7200 saved up.
We could apply the additional $343 to our principal or we could divide it up on a monthly basis.
At the end of three years with no additional principal paid our outstanding loan balance would be: $152,000
We then sell her the property at 199,900, less payoff and the return is $47,900 less $39,980 (our down payment) is $7,920 + 12,348 ($343×36 months)= $20,268 return on investment which is not bad and much more lucrative than any bank or the stock market.
The reality going in the door, know that capital is going to be tied up for three years. Once in, then in for the three year period, secondly, know the risks, she defaults, we keep her down payment money and the property, but then we’re stuck with the property.
Additionally, we buy the property a tad discounted at the front end, say for $190,000 or $188,000 with seller paid closing costs and the revenue stream looks even healthier.
Interested in learning more, call me and let’s talk about it.