Rent to own, lease to own, rent credit - Safe Act and Dodd Frank

It’s my understanding that due to the Safe Act and Dodd-Frank, rent to own and lease to own is illegal while the rent credit system may be questionable. Lately, I’ve seen quite a few parks for sale in Florida with rent to own contracts on a few houses. Additionally, I’ve done some research and found certain states have laws on RTO - for example, NY - where according to this link it seems to be legal: Mobile Home Rent-to-Own Contracts | Legal Assistance of Western New York, Inc. ®

Have there been any updates to the Safe Act and Dodd Frank which now make RTO/LTO/RC legal? Is it state by state dependent? (It’s my understanding that Federal Laws would supersede state laws). If it is not legal, is there a way to purchase parks that might have RTO contracts in place by converting them to something legal? Or would one need to not purchase these parks? How do people approach the issue?

Lastly, assuming these methods are illegal or ‘grey’ and one would prefer to steer away from these methods, if you have POHs that you need/want to sell off and don’t want to become a licensed mortgage loan originator, is the only option getting your tenants third party financing? (I am making the assumption tenants will not have enough cash to purchase the home outright). I’m sure it’s market dependent, but how realistic is it to believe many tenants can qualify for third party financing and is there a way to determine this on a market by market basis?

While I doubt the seller would agree, my thought on the RTO contracts is to not take them with the purchase. Have the seller hold them and sign a lease(s) for lot rent only. I wouldn’t want the liability or title to the homes. Since I don’t count income from home (vs just lot) rent anyway or value homes in a sale, it wouldn’t affect my offer price.

Park owned homes are bad enough without adding RTO into the mix.


I can’t understand what is the difference between rent and lease? I found this comparison article Lease vs Rent - Difference Between Lease and Rent | Difference and Definition

Nothing. They mean the same thing. But there is a difference between RTO and “lease-option” which means a rental agreement with an option to purchase in the future.


Thanks everyone for the help!

There are at least three lenders out there that have special programs who will make loans using either their money or yours to marginal credit folks - if you have enough volume to make it worth their while. They all have different deals and none of them operate their programs in all states; some of those programs are a better deal than others. If you can qualify on volume I would talk to those that operate in your area. They will also want a shot at your better credit borrowers as well.

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@RishelConsultingGroup thank you for the information! What volume is generally needed to make it profitable?

On the rent credit system, I found a post you made back in October 2017 regarding the rent credit being declared illegal in Illinois and Pennsylvania. In regards to Pennsylvania, has anything changed since 2017? If not, are there ‘forms’ of “rent credit” or “lease with option to purchase” type of programs that are legal in Pennsylvania?

I tried to use google to find answers to this but was unable to. I really appreciate the assistance! As I am just starting out, Pennsylvania is a market I would like to focus on and I want to understand options for converting POH to TOH.

First: We closed the consulting business at the end of 2019 so I could fully retire.

If anything Pennsylvania is worse than it was several years ago for those interested in seller finance.

Most of these companies want 4-5 loans every month with an eye to building a portfolio of at least $500,000 fairly quickly. One I did not mention wants a minimum of a million a month in volume.

Talk to:
Park Lane Financial (talk to Luke Meyer)
Triad Financial (talk to Darrel Boyd about their COP program)
the other one does not operate in Pennsylvania

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Thank you for all of the assistance @RishelConsultingGroup

I am going to cover this in an upcoming podcast. The Mobile Home Park Lawyer Podcast is launching in a few weeks. I will try to circle back and reply to this post in detail but too slammed at the moment.


@TheMHPLawyer really looking forward to it. Please let me know when it launches!

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This is why we exclusively lease-option. Too much gray area in rto/rent credit. No deposits, only option fees. Only an eviction, not a repossession. No confusion or scrutiny if you end up in court either. We also charge 2x monthly rent for option fee and that has mitigated losses on bad tenants.

Also, tenants qualifying for 3rd party financing isn’t as hard as you think, even on used homes. A couple lenders out there will go as low as 500 credit score, but most are 600+ and we’ve seen DSCRs as high as 42% for good credit risks.

@Jake what states do you invest in?

Looking forward to it. Keep me updated please!

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