Rent To Own Vs. L/O

Is there a difference between these? I recently mentioned to an appraiser that I was considering doing my first L/O on a property I own. He said to make sure the tenant knew it wasn't a rent to own because he had seen tenants who thought they could keep renting without having to purchase. From this one comment he made, it makes me think I would rather do rent to own. Ideally, I would like someone to rent the property who would take great care of it in hopes they could one day buy it even if they never were able to. I thought about telling them I would give them the equivalent of half the first years rent if they decided to purchase at any point after the first year. I'm not sure if this is what is called rent to own or not.

Comments(2)

  • nebulousd3rd November, 2003

    lease options - have the option of buying.
    lease purchase, rent to own - will buy in a given time frame

  • classimg3rd November, 2003

    lease option - Money is paid for the investor to create a purchase price. A rental agreement is separate from the option agreement. When the option is exercised by the tenant, a sale occurs and the deed is transfered to the tenant.

    rent-to-own - this may be introduced as a long term way to say, rent with a 3+ year (how ever long the tenant takes) flexible/loose contract favoring the seller.

    As investors, we would not tie up our property on a contract (for this discussion) with a rent-to-own technique unless we kept all the tax benefits of the unit and continued renting on a 20 year agreement.
    [addsig]

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