Questions about rent to own
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.
Questions:
-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?
Thanks!