anyone familiar with the lease to own process for single family home? im the owner, pros vs cons, tips? thanks

Answer 1

my sister is in the same scenario if you choose to put the house under the section 8 program your money is 100% guranteed back when you rent it out i s someone wanting to rent with the option to buy if you do this process you get more money in the end

Answer 2

The link below has a great article-- check it out!

If you don't need the cash sale right away, and can hang on to the property for the length of the lease and beyond, it will work very well for you. The buyer/tenant still pays rent plus an additional fee which you hold in escrow, to be applied to the purchase at the end of the lease, or forfeited to you if they don't buy. So you're making money on the rent the whole time, and if the tenant doesn't buy, you get some additional money.

The pitfalls are the way you agree on the sale price--- if you do not word the contract properly, you may agree to a price that's fair now, but undervalued when the lease ends. That can work in your advantage, too, if property values go down. When setting the sale price, try to avoid an actual number--- say instead "20% over tax assessed value on most recent assessment" or something. if you can!

The other issue is buyers do not always understand that they lose their rent premium if they don't buy. They may even take you to court to try and get that money back. So make sure this part of the agreement is very clearly worded, and that you explain it to them verbally too, so there's no confusion.

The big down-side to being the owner in this scenario is you can't sell your house before the end of the lease. If you were on a traditional lease, with no ownership option, your tenants would most likely be on a month-to-month lease after the first year; if you needed to sell in a hurry, you could give them first right of purchase and if they couldn't afford or didn't want to buy the house, you could give them notice to vacate (30-90 days). But in a rent to own, if you needed to sell during the lease period, you would not be able to.

Answer 3

A brief addition to what has already been said: Most people will not exercise the option to buy and almost all of those who do not opt to buy will move out (for reasons that I do not understand).