If You Can't Buy My House, Rent to Own It
It’s a concept that’s coming into vogue. But is it right for you?
What Could Go Wrong
Your imagination is the limit, but the most logical scenario is that your renter, after paying rent and money to go toward a down payment for those two years, still can't get approval from a bank to buy your house.
Or, arguably worse, your renter could have trouble making payments to you while you still have to pay the mortgage on your house, and you decide you want to end this relationship. Except that your renter resists being kicked out of your home, and you each get lawyers and everything deteriorates from there.
Or your renter might be a slob and treat your home poorly, letting their pets ruin the carpet and their kids draw on the walls. This isn't so bad if they buy the place, but it's quite bad if they don't. Fortunately, one of the benefits of renting a house to someone who plans to buy it is that, generally, they treat it much better than they do a place they believe they'll never own. In fact, some people may treat your home better than you do.
And so if you choose the right tenant -- and especially if you write up the right contract -- as Rick famously said in Casablanca, this could be the beginning of a beautiful friendship, or at least a great landlord-tenant relationship.