Has anyone had success with doing a rent-to-own? Or had an unsuccessful experience? How long of a term did you do? How much did they put down? How much additional rent were they paying toward the deposit?
The local market has come down quite a bit in the last few months, and Plan A was to sell our primary residence (it was a live-in flip), but where it is right now, we'll be lucky to break even when we sell. I'm wondering if doing a rent-to-own as a Plan B would actually be a better bet. The reason we're going to have to do something with the house is because we've found a new primary residence (which is what we've been looking for for the past 3 years) that we would like to purchase, and we'd really like to take possession by end of summer/early fall as we would have to do fencing and possibly a septic system before the ground freezes. So we are on a time line.)
If we refinanced the current house for a 30 year amortization (we have about 20% equity in the property, minimum needed for refi here) at about 2.59%, with property taxes (~$170/m) and insurance (~$100/m), our PITI is about $1360. Market rent would likely be around $1450. As you can see, I haven't even factored in vacancy or cap ex (and I would have to manage myself), so I wouldn't consider it cashflowing. However, my thoughts are that if I do rent-to-own, I'll likely have better tenants that take care of the property and who will pay, and I have a more significant deposit than just a security deposit. The negatives being that I will have that 20% equity tied up until it sells, and there wouldn't be anything left over to invest in other properties until it sells, and I still have to worry about it and manage it until it does sell.
On the other hand, if we sold, I'm not making any money, and I'm hoping to break even on it, but it would be far less hassle, even if we are losing money.
