Rent to Own or Lease/Purchase in Kentucky

[Mike Howard]

Who has experience in rent to own or lease/purchase options in KY?  Anytime I advertise a property For Rent, I immediately have numerous inquiries about Rent to Own.  I like the idea of getting a decent down payment vs. a rent deposit.  My attorney, however recommends that I avoid this since the local courts tend to look at this as a purchase, which could result in a lengthy foreclosure process when things go south.  She advises that eviction is much quicker and simpler to implement.  Is there a way to structure this in KY, so that I can get a down payment but avoid the lengthy foreclosure process, when the tenant is not able to close on the property?

[Michael Rogers]

I've looked at doing this too.  I have a couple of tenants who have expressed an interest to buy the house.  My thought was to do what Steve suggested, create an "option contract" and a "Lease agreement."  The option contract will have the tenant give you a decent down payment - $3k-$8k, then the rest due after 2 or 3 yrs (length of time negotiable).  Then, the balloon is due at the end of the period.  The lease agreement spells out the rents only, separate from the Option contract.  If the tenant doesn't come up with the balloon payment, you keep the "option amount" paid up front.  Alternatively, You could consider a land contract, where you keep the deed, and sell the house via a land contract with a note (promise to pay) embedded in the land contract.  You can charge a down payment for the land contract too.  You set up an amortization schedule, and an interest rate and length of time.  Once all payments are made, then you deed the property to the borrower.  HOWEVER, I have heard that land contracts may not be legal in KY anymore?  I am still researching this.