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Ben Russell
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Questions about rent to own

Ben Russell
Posted Sep 17 2023, 11:57

We just finished a flip that is listed on the MLS. We decided to also offer it as a Lease with a 3-year option to buy. Having never done one of these, can I get some feedback on how we structured the option and pose some questions:

-Option price would be $263k (listed at 260)

-3-year option.  Each year the option is not activated, the price increases 1%.

-1750 monthly, with a $150 credit going towards the purchase price/down payment.  Rent credit is non-refundable. Market rent is around 1500-1600.

-5% option fee going towards the price/down payment.  This amount is not refundable and would be based on good credit (% would increase for credit below 730).

-Would still ask for a security deposit and our standard rental qualifications.

-Additionally, a lawyer would draft the lease and option contract.


-Will most lenders accept the option fee and rental credit at closing as a seller concession, going towards the buyers down payment?  Is there a better way to ensure the money can be used as part of the buyers down payment?

-A few people have asked if the options fee and credit is escrowed.  Is this standard practice?  I get the safety net for the buyer, but at the same time we cannot sit on that money for up to 3 years.

-Is there any other considerations?


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