House: Rent or Sell?

**Seeker** · 08-16-2009, 10:27 PM

I'm not sure why you'd not want to take advantage of a Lease Purchase.

How much of the $800 per month is to be applied to the "purchase" if the renters decide to go with this option and exercise it? It's not usually 100% of that monthy rent.

Thre's also usually an upfront fee that the landowner gets to keep regardless of whether or not they exercise the option to purchase.

People (renters) with a LP option usually pay for repairs, owners usually keep the tax deductions.... etc. Renters usually take better care of the property when they intend to purchase down the line. etc.

Make sure that you have a binding contract with everything specified.

There's usually many advantages in Rent-to-own for a landowner.

**psuicyde king** · 08-17-2009, 08:27 PM

I have two reservations. One is that I could potentially make this into a long term rental property and turn a profit from it. The second is that the house is currently listed at a 10k loss to me. That would mean I'd recover zero dollars between now and the date of the purchase, and then lose 10k after the fact.

**Seeker** · 08-18-2009, 01:12 AM

Originally posted by psuicyde king View Post

I have two reservations. One is that I could potentially make this into a long term rental property and turn a profit from it. The second is that the house is currently listed at a 10k loss to me. That would mean I'd recover zero dollars between now and the date of the purchase, and then lose 10k after the fact.

One never knows what the future holds. A lot depends on the location and the availability of housing and jobs in the area. Only you can determine that. If you rent for $800/month, you are paying an extra $50/month on the mortgage.... so you still lose some; although tax deductions may make up for the difference somewhat.

Be aware that the "assessed value" of the property may go lower in the time you are renting it out... in which case your agreement on the purchase price of the house will be greater than current value anyway... which is also a gain that you may lose if you decide to not do the rent-to-own option. (hmmm starting to talk in circles here

). Over time, anything and everything can change.

If you have reservations, and see staying in the area "long term" and turning a net gain somewhere along the line, then you shouldn't do a rent-to-own option. That's what it boils down to.

Ultimately the renters you have lined up, may not want to rent your place without that rent-to-own option. They may not be able to "purchase" at this time either, but renting without a provision seems a waste to them entirely.

**Justice44** · 08-18-2009, 12:47 PM

Originally posted by psuicyde king View Post

Hey all,

I have a house I still own from a previous divorce. After being on the market for over a year, I finally have a couple people interested in renting - one interesting in a rent-to-own.

The house appraised at 146k, I bought it for 125k 3 years ago. I have it on the market for 115k and have no offers.

I owe 115k, so even if I sell it at the listed price, I'm out the closing costs.

My monthly payment is 850. I have a couple lined up to rent for 800 per month, and they are the couple who wants to rent-to-own.

Question: Should I simply rent it to them, allow a rent-to-own arrangement, or just skip the rental all together and sell it? I'm seriously considering making it a long term investment.

I honestly don't know what you could do. This question is for the veterans on this board. I am only a rookie.

**cptacek** · 08-19-2009, 06:15 PM

I don't know if you can do a rent to own on a house with a mortgage? I thought I read in some old loan papers that that wasn't available. Just something to check out before going to far in the process.

House: Rent or Sell?