The total payout demands by your lender(s) for all for your mortgages must be 20% lower than the fair market value of the home.
We will find an investor to pay off the bank(s), then rent to own the house to you.
Our flat fee is $3000 for homes under $300,000 and $5000 for homes above $300,000. This fee must be built into the price for which the home is sold to the investor, and will be payable to us by the lawyer(s) involved upon closing.
This will involve the investor taking control of the house, and possibly taking actual ownership. These are options to be discussed by the parties involved.
The first year appreciation will be higher than in a standard rent to own arrangement. This is because you, the current owner, will still be able to buy back the house for far below market value.
- House fair market value $400,000.
- Bank is threatening to foreclose in 10 days.
- You believe you have the ability to recover your finances and make mortgage payments within 2 years.
- Bank’s payout statement with all arrears, penalties and legal fees is $320,000.
- Investor pays bank payout amount plus $5,000 fee to RTO Partners and any other expenses, let’s say the total is $330,000.
- Investor takes control of house, and rents it to you for (eg.) $2000 a month. This may be waived for the first few months as compensation for the investor’s low purchase price, and in consideration of your current cash flow problems.
- The first year appreciation is $30,000. Which means if you are able to buy back during first year, and the house is still worth $400,000, you are buying it back for $40,000 below fair market value.
- Second and third year appreciation (if the investor extends you a lease or option beyond the first year) can be more in line with standard RTO appreciation rates, ie. 3% – 5% per year.
Clearly this strategy is only for owners without other options, and who strongly believe they can take back ownership and control of the house fairly quickly. This applies in situations where the owner will be receiving lawsuit settlements, business contract payouts, inheritance or any other large windfall within a predictable near-term period, and where abandoning the house would not solve any problems, cause massive credit damage, and leave you (the owner) with a difficult task of finding a new place to live.