jseamless 0 Report post Posted January 6, 2004 hello, i noticed the rents are low here in my area. on a lease option, shouldn't the rents be close to what a 30 yr mortgage should be? after all if you are going to work with them to get financing in the near future, they should be able to afford a similiar mortgage note? i appreciate your input... Share this post Link to post Share on other sites
MichaelC 160 Report post Posted January 6, 2004 Ideally, rents and mortgage payments would be comparable. But, in the real world this is not always the case. In a strong market with a shortage of available properties, rents can be more than a mortgage.In high priced locations, the rent charged will often be much lower than a mortgage payment. There will be a variety of factors which will contribute to determining the buyer's mortgage payment: amount of down payment, APR, type of mortgage, etc. That's why I always tell my tenant/buyers not to wait until the eleventh month to begin the mortgage application. I try and get them to speak with a mortgage broker or two very early in the process so they have an understanding of what is involved and what is expected of them. If they're serious about purchasing they wil readily agree. Share this post Link to post Share on other sites
R/E Possibilities 0 Report post Posted January 10, 2004 Just a thought. From an affordability standpoint. Rent is not tax deductible. Interest and property taxes are (for most people). Someone paying $1200 a month rent could likely afford $1800 per month (mortgage, tax, insurance). A rough estimate is you save about 1/3 from a tax write off. This might be a good thing to mention to a prospective tenant/buyer. Ed Share this post Link to post Share on other sites
MichaelC 160 Report post Posted January 11, 2004 Indeed. It's always a good idea to tout the many benefits of being a homeowner versus being a tenant. The tax benefits are just one of them. And most every tenant you speak with will be well aware of the advantages already. It isn't a hard sell at all. Share this post Link to post Share on other sites
Mark in St. Louis 0 Report post Posted January 12, 2004 This is just my two cents. If the market allows for it, I would think it would be in our best interests to set the rent with our tenant-buyer slightly above what a mortgage payment would be. That way they have another incentive for exercising their option to buy....their monthly payment possibly goes down. Anyone else? Share this post Link to post Share on other sites
MichaelC 160 Report post Posted January 12, 2004 Agreed, Mark. If the market will bear a higher rent, then lowering their monthly payment by buying the property is yet one more incentive for a tenant/buyer to take care of the premises and to ultimately exercise their option. Share this post Link to post Share on other sites
