Start a new topic

Rent-To-Own Lease

I have a couple that has been renting my condo for $1500 per month for just over a year now. They inquired about a rent-to-own option. I have done a lot of research and it seems like a reasonable option. My question is in regards to the "extra" rent money they are paying - for instance if they start paying $1700 per month with $200 going towards the purchase of the condo. As the landlord/seller what do I do with this extra money? Am I supposed to put it aside in a special account or do I use it to pay extra on the mortgage? What happens if I use it for other expenses - like repairing the fireplace or broken appliances?

This is money that goes toward the payment of the house, do not spend that. The $1500 would be the money you earn and can use as well as the security deposit. You will need a real estate attorney to do sales contracts they will be able to direct you as to where to put the money. I would assume at the moment put in in an escrow account until final closing.
Why don’t you hire a real estate company? The agents at Cloud Real Estate helped me in selling my rental property to the tenants.
You need to check the laws of your state. The new Dodd Frank regulations enacted in 2014, I believe, have changed regulations for rent to own scenarios and how you're allowed to charge the tenant. It is my understanding that you are not allowed to do partial credits towards purchase price anymore. You can create a lease option with a fixed purchase price if they are going to cash you out. There would be a straight lease and a separate sales agreement. You are best to speak with a very knowledgeable real estate attorney who's familiar with the rules of investing/Dodd Frank.
Ok what About wanting to sell my property to my renter? I owe more than it's worth
I agree that you must check your state laws as each state is unique. In Maryland it's done as a Residential Lease Agreement & a Maryland Residential Rent to Own Lease Agreement. It specifically must state " THIS IS NOT A CONTRACT TO BUY" in it. It protects both parties & states both landlord/tenant responsibilities during the term chosen.
Login to post a comment