Landlord Question and Answer Forum

Forum / Other / Rent w/Option to Buy

We are 1st time landlords on a home we couldn't sell. It was on the market for 3 years before deciding to rent. Our new tenants want to rent for a year with an option to buy at that time. However, they have a defaulted mortgage on their credit history and can't get a bank loan. They want to make monthly payments with interest to us. What are the pros and cons to this scenerio?

Tim and Dale A, NC on Friday, May 20, 2011

RE: Rent w/Option to Buy

Just because you sign a lease agreement with option to buy doesn't mean you have to lend them money to buy it, it's still their responsibility to line up mortgage financing. I would sign a lease option agreement with them, allowing them the option to purchase the rental property, and if they're actually serious then they'll take the next year to clean up their credit and finances so they can get a loan when the time comes.

Posted by Gregory T, CA on Thursday, May 26, 2011

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