Most Want To Buy Outright...
Got a 3br/2ba/2 car/pool...Got a Rent To Own ad going, yard signs, etc...all call answered by voicemail, which gives description, address, monthly at $1,450 and few other details about property. Does not mention purchase price. Does mention some option money required, but not the amount.
75% of my call backs to those that leave a message are folks looking to buy outright only.
Thoughts?
IF you can make a profit sell it
Yea could sell now and make $10,000-$15,000
But can't .. I just bought it!
I would not be able to 1031 exchange it and capital gains will be a killer.
Anyhow, want to RTO for monthly + cash flow, mortgage interest deduction, depreciation & 3yr RTO at 5% per year appreciated price...
I just am curious why so many, even though it clearly marketed as a Rent to Own, want to buy outright?
Look, it's your toy so play with however you want, but cash now is always, always better than cash later.
It's a grey area at best whether you could do a 1031 exchange on this property anyway. Since you are offering an option to purchase the property, your intent is to sell. If you intent is to sell, then by the definition of a 1031, you can't do one. However, some tax advisors will be aggressive and do it anyway. Just hope they are still around for you if the feds come looking for you.
If you just bought the property and resold it now, you wouldn't have capital gains, but rather ordinary income, because this would be a dealer transaction. As income, it would be taxed at whatever tax bracket that you are in currently. So, assuming that $10K would be your NET income, and you were at the 30% tax bracket, you'd owe about $3K (simplified). As an active business, you'd also have other expenses to help offset this amount.
Roger
Not sure but the problem might be the publication you are running your ad in. There is also a nationwide service that can possibly provide you with a tenant/buyer. Good Luck.
Dave
Thanks for the helpful information...
I guess I am just wondering if anyone else is finding that when they place a Rent to Own/Lease Option ad, a majority of the interest comes from people looking to buy the home outright, not looking to RTO or L/O.
I am finding this, and I am trying to figure out the reason for it.