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raquelm

Question about rule of thumb for a potential tenant-buyer

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When selecting a tenant-buyer, is the rule of thumb that they should have the income to make payments and option money, but need to improve their credit (and that their credit should be fixable in about 12 months)? This seems to be what a potential tenant-buyer would need to demonstrate in order to have the best chances of actually completing a purchase.

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Raquel, you pretty much nailed it with that. I like to say that most t/b's need to buy time before they buy the house, and that is precisely what a Rent-to-Own can do for them.

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I look at a few major things when looking at a TB..

DTI...calculate 43% DTI based on their MONTHLY GROSS INCOME..

So...if they make ....$5,000 a month...gross...x .43...that is $2150 they can qualify for....but...you have to subtract the car payments...child support...credit cards...etc.

 

I look at real estate accounts...do they have an FC in the last year?

 

I look at public records....do they have a judgement or tax lien or BK?

 

I could give a rats ass if they have the down payment....the question is...how long to finance?

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ooooooK Pilot,

 

I look at real estate accounts...do they have an FC in the last year?

 

I look at public records....do they have a judgement or tax lien or BK?

 

I could give a rats ass if they have the down payment....the question is...how long to finance?

Please expound on this. Inquiring minds NEED to know :D

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Also Raquel, can the potential tenant/buyer demonstrate that they are willing to put a plan together at the start of the lease term to get into position to obtain financing, and work the plan through the lease term to purchase. Or are they just giving lip service.

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I look at a few major things when looking at a TB..

DTI...calculate 43% DTI based on their MONTHLY GROSS INCOME..

So...if they make ....$5,000 a month...gross...x .43...that is $2150 they can qualify for....but...you have to subtract the car payments...child support...credit cards...etc.

 

I look at real estate accounts...do they have an FC in the last year?

 

I look at public records....do they have a judgement or tax lien or BK?

 

I could give a rats ass if they have the down payment....the question is...how long to finance?

 

Please explain the acronyms for those of us who "don't get it" :(:wacko:

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Hi Charles,

Yeah, those used to drive me nuts!! I still don't know all of them but I wrote the ones I know within the text below.

 

I look at a few major things when looking at a TB..

DTI Debt To Income...calculate 43% DTI based on their MONTHLY GROSS INCOME..

So...if they make ....$5,000 a month...gross...x .43...that is $2150 they can qualify for....but...you have to subtract the car payments...child support...credit cards...etc.

 

I look at real estate accounts...do they have an FC Foreclosure--I call em Forcs in the last year?

 

I look at public records....do they have a judgement or tax lien or BK Bankruptcy?

 

I could give a rats ass if they have the down payment....the question is...how long to finance?

 

Please explain the acronyms for those of us who "don't get it" :(:wacko:

What I don't get is how John (Pilot) says He doesn't give a rats azzz about the down payment.

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Just a tip: while its nice to learn mortgage lingo, a mortgage loan officer can do the job much better and without the learning curve for you. Ask for a referral, or just make friends with one at your local bank. They check the tenant-buyer's credit and let you know whether or not they would ever qualify. That's one less step for you, and potential business for them.

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