I don’t know about you, but I’m a nut for digging up good profitable income streams I can build without putting in too much time or effort.
In this post I want to tell you about one of my recent favorites, which is taking advantage of great rent to own real estate deals to buy property with very little money down, and turn that into cash in your pocket every month.
It’s surprisingly easy to do, if you know how to find the right deals and a seller who is willing to work with you on the terms of the investment.
With the right seller, you can use a rent to own structure to give you time to buy in to the property, and then refinance the purchase with a bank, once you’ve built up a little equity in the house.
Let me give you an example of a deal I did recently.
Last year, I was browsing around on Homeowner’s Guides, and I found this great rent to buy house in Charlottesville, Virginia, and snapped it up. I ended up paying only $5,000 down as a deposit, and convinced the owner to finance the rest of the purchase.
For the next 12 months I “rented” the property from him, but during that time 90% of my rent payments were actually going towards the price of the house, so that 10% difference is just a small premium to build equity in the property.
At the end of the year, I then had 20% equity built up in the house, and could use that equity to qualify for a bank loan and traditional mortgage at a good rate, without needing to pay the extra PMI insurance that is commonly required when you don’t own 20% of the house itself.
Meanwhile, i’d spent that year living part time in the property, and renting out one of the rooms. At the end of that first year, I then found a second person to rent out the other bedroom, and now I have a stable rental income stream coming in from the property, which more than covers the mortgage.
On an average month (if there are no major repairs or anything to be done), I make $560 after paying the mortgage. That means I make $560 on a deposit of just $5,000!!!
That’s a pretty incredible return for not very much money, and while it isn’t enough to let me retire quite yet, it’s definitely a step on the path. I just need to find a few more deals like this and I’ll be good to go!