As a homeowner would renting out my house with an option to buy be a good idea? Are there any risks?

Posted by David Feldberg on Friday, June 21st, 2013 at 4:38pm.

As a homeowner if you are even open to the idea of selling your home, renting to tenants with an option to buy is usually a great thing, here are the pros and cons.

Benefits of Renting your house with an option to buy

Usually you are charging a higher then normal rent because a portion of their payment will go towards their down payment. For example lets say the normal rental rate is $2000 per month, you might set up something where your renter is paying $2300 to $2500 so $300-$500 per month goes towards their down payment if they exercise their option to buy it. Should they not choose to buy it however you just collected some extra rent. Another benefit is your tenants will probably treat their home better then if it was just your house, its going to be their house and they will treat it better most of the time. They are also more likely to improve the house as they plan to be purchasing it at some point in the future.

Negative effect of renting your house with an option to buy

Really the only negative is you set the price at the time the lease option is set up, so if the market it trending higher you wont participate in that additional appreciation, your renter will, assuming the exercise the option to buy.

For more information on lease options in Newport Beach please contact one of our knowledgeable realtors today.

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