So you have a property that you own and you’re wondering if it is better to rent it out or sell it. Why not both? There are many upsides to selling your home as a rent to buy option. For one, this attracts more buyers to the property than a hard sell would. If you have a rent to buy option with a buyer, you can ultimately price the home higher and receive monthly income during the renting period. Buyers who are looking for a rent to buy option are typically more invested than a standard renter, therefore you get someone who is really taking care of the property with hopes to buy and make it their own.
While renting out your home with an option to buy has its upsides, there also comes the downsides. This type of deal can be risky for sellers because there is no certainty. The renter has the right to opt out and not buy the home at the end of the renting period. If the market changes and home prices fall, renters are more likely to opt out to buying the home at the set price at the time of the agreement, although, as the seller, you keep all the money made up to that point including the premium they must pay to lock in the option. Likewise, if home prices skyrocket, you as the seller are held to the agreed price and might not make as much profit as desired.
During the renting period, you as the seller act as a landlord. All repairs and anything “wrong” with the property is up to you to fix and maintain. If buyers find something majorly wrong with the home, they might opt out of their option to buy. Furthermore, since there is a renting period instead of a lump sum, you get paid slowly and monthly, which could be a pro or a con based on your situation.
When deciding if this is your best option for your property, take some things into consideration: where the market is, how the condition of the home currently is, what your financial needs are, and who you are renting the home out to and if they will take care of it. It can be very risky for sellers, but if you can check these things off of your list, it can be a great investment to get the most value out of your property.