Rent to own Question

[David Stone]

Hi BP!

I have a tenant interested in purchasing the house we currently rent to him and we are ready to sell. He still needs time to build his credit until he will be eligible for financing.

Q#1: If I get a signed option to purchase contract signed, do I keep it and turn it in to escrow at the time he decided to purchase?

Q#2: At the time he decides to purchase, will I need a separate purchase agreement?

Q#3: Should I be doing anything to help him be set up for success?

I'm still a newbie, any advice is welcome as I am always eager to learn!

Thanks, David

Elma, Wa

[Sarah Ziehr]

Draft up a purchase agreement now and collect earnest money. Offer him a closing cost credit of the amount of earnest money at the time of closing. Closing and mortgage contingency dates for 6 months out, or however long he wants. 

This will lock him into buying, and if he backs out you get to keep the EM deposit. If he doesn't want to do that, then I would simply offer him the first right of refusal because he could always change his mind on the option.