So I mentioned previously that we currently have two houses. Well over the last few weeks we entered into a Rent-To-Own agreement to sell the vacant house.
The process was similar to a normal residential sale. Buyer submits a purchase agreement and gets a home inspection. The difference is there is a lease option, which states the option fee aka down payment, and a rental agreement.
The pros for the seller are for the term of the lease
- Mortgage payments paid.
- Hopefully a monthly profit.
- Continued tax deductions.
- Typically a higher quality tenant, since they do want to buy the house.
- Tenant is responsible for maintenance and repairs.
Cons for the seller can include
- Having to be a landlord.
- Tenant could trash the place once they realize the still can’t afford the house.
The rental agreement for our RTO is 2 years, at which time the buyer has to obtain financing or lose the option fee. From what I’ve read the buyer never ends up purchasing the home for most of these RTO. Check back in two years to see if this is the case for us ;ob
The race for the tenant to move in was fraught with drama, but that’s a topic for another post…