Rent-to-Own

[WonderWoman]

My hubby and I have a beautiful home for sale. Some of the replies to the ad, have been asking if we are willing to do rent-to-own. We had our own thoughts on it, but we asked some "qualified" people their opinions and we got mixed reviews. Has anyone ever done this or knows much on the topic?

[physique]

i did this when i bought myt first place. basically u are the bank and u hold the mortgage.

i had to pay the guy at the time 6% interest for doing this. the house was changed to my name, but the insurance i had to take out was put in his name. so if there is a fire or anything, he is paid out instead of me. seeing as i dont own the house.

we only did this for 3 years, as it took me that long to get a mortage on my own.

sorry i cant give ya more details for longer terms.

but in the end, i would say if u don t need the money upfront and can make some decnet inertest by "u" being the bank then go for it. if ya need the money, dont
just make sure a good lawyer draws the papers up.

[musclehead123]

My hubby and I have a beautiful home for sale. Some of the replies to the ad, have been asking if we are willing to do rent-to-own. We had our own thoughts on it, but we asked some "qualified" people their opinions and we got mixed reviews. Has anyone ever done this or knows much on the topic?

I would not do it. Think about it if your house is worth $100 000, and you set the interest rate at 5%. Every year you make $5000 in interest and it takes him 3 years to pay for your place, you'll have $115,000 at the end of the three years (maybe even less if you allow him to start paying the principle as the start, but best case scenario you'll make 15k) But say if the price of houses goes up by 12% one year and 10% the next and the third year goes up by 8%, and you have plans to buy another house or other real estate investment. And the new investment was originally worth $100 000 when you started receiving payments for your old house. That new investment is going to be worth (3 years later) $133, 056. So now you are behind by $18,056 to get your new property. Of course if you are not looking to invest in other real estate then i suppose it might not be a bad idea. But i think that your dollar's purchasing power will be worth more now than in the future. Plus you dont have to worry about default payments and so on.

Another way I heard about doing this is you look at the trend of prices of houses, so if the trend in your area is averaging 8%, you'd tell the buyer that you'll sell the house 5% higher because of this trend. (this is assuming he will pay you out next year).