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Rent with option to buy?
Has anybody ever done this as either a seller or buyer? How does it work exactly?
DH and I are currently trying to sell our house and are doing for sale by owner. We had someone ask us if we would consider renting it out with option to buy. They really want to buy but aren't approved for a loan yet - they are military and don't expect it to take very long (we will talk to them more about how long). We really didn't want to rent out the house because we will be moving out of state and it will be hard to keep an eye on it and possibly have to put it for sale again while living far away. Also, if they were paying rent similar to our current mortgage, it would likely be more expensive for them since our house value has decreased significantly since we bought (we owe more than the house is worth) and the interest rates are a lot lower now.
Anyways, just really wanted to see if anyone has done this or would recommend it or not.
TIA
Re: Rent with option to buy?
Big reason not to rent. Having renters living out of state would be a major PITA. You'd basically have to hire a property management company or handy-man to be on-call if something went wrong in the home. Also, renters are rougher on properties (in general) since they don't own the place. If your rent-to-own situation fell through, you might have to fork over some cash to clean and fix the place up to get it back into showing condition.
We are currently doing a lease with purchase with our old house. It is difference then just doing a normal rental agreement.
We had a lease agreement drawn up by our lawyer. The people leasing the house gave us 5% as a non-refundable down payment. Then they pay us lease payments every month. They can get a mortgage anytime in the next two years and buy the house for the price we agreed upon.
Maintenance etc is all spelled out in the agreement. (In our case, they are responsible for all maint, up to a certain amount per occurrence)
If they are really interested in buying the house, this may be an option for you. You would want to speak to a real estate attorney.
This is exactly what we are worried about! I mean, if it was a month or so, ok - but why not just wait a month to close then? Long term, I really don't want the hassle of having renters that may or may not be able to buy.
Thanks so much for the response.
This definitely might be an option. I like the down payment and maintenance agreement you have. That way at least you know they are serious.