Thank you Aniyah for the kind words!

Most of the analysis was don’t just through google researching how rent to owns work. When we posted our place for rent we noted that preference would be given to those interested in rent to own. We came up with the purchase price, option fee, and duration that the rent to own could be in place until it had to be struck before forfeiting the option fee. We also added in the monthly rent credit which doesn’t seem to be as popular.

I did reach out to real estate lawyer who recommended reading the book Investing In Rent To Own Property by Mark Loeffler which I too read. It was a different spin on rent to owns which I hadn’t thought about but didn’t apply to us as we already had the property in place we were looking to set up the rent to own with (sounds like you’re in a similar boat). Most of the time rent to owns are appealing to renters who want to buy but don’t quite have enough saved for a down payment or need to build up their credit a bit more. In our case, our renters just wanted to get a better feel for the town as they just moved across the country.

I’d do the math and if it looks like you could make more going rent to own and you’re willing to be a landlord for a bit longer, it really could be a win win for both you and the tenant.

And FIRE stands for Financial Independence Retire Early – we’re a much of wealthy weirdos (thanks to delayed gratification and high savings rates) who value time, options, flexibility vs being tied to a job.

Ps What does FIRE stand for?

Susan

Yep! There definitely are some pros and cons to real estate but I sure do love the hands off approach to stocks! Having some interested in a rent-to-own situation definitely made us feel much more comfortable with the situation as they likely will be treating the place as if it’s their own. Thank you and life so far has been great!

However, I LOVE that you were able set up a rent-to-own situation. From what you’ve shared with me, I think it’s an ideal situation. (I was seriously considering this in 2017, just before I changed directions and decided to do the Smith Manoeuvre instead.)

Congrats on making all these exciting money (and physical) moves. Can’t wait to hear more about life in your new house!

Hey Bob, we too didn’t think we’d be going the landlord route again. We did it once in 2015-2017 while renting out our FL townhouse once we moved up here. Thankfully no issues like your colleague! But it’s still hard for a control freak to not have full control of their property! This is why we don’t see it as a long term play.

We considered not using a Realtor and we wouldn’t be opposed to this for the fees saved. However, we also appreciate how much less hassle there is with a Realtor involved. Ideally, hopefully we go this rent to own route which would eliminate realtors.

Good point regarding taxes -I just updated the post as yes this is another factor to consider as well. It will depend on our tax brackets and if Nic is allowed to file the full amount of rental income under her name or not. If so, taxes will be very minimal as she only has CCB to report. We still need to dig into this to ensure we report it properly. Yes, ideally keeping the mortgage on the rental would be better as you could then deduct the mortgage interest as an expense. Unfortunately, in order for us to qualify for a mortgage at our new place, we had to pay off our townhouse mortgage in order to receive financing. So yes, if we could have had our way, we would have kept the mortgage in place.

As always, thanks for chiming in!

In the same situation as you, our calculations would not include the realtor fee. We would sell the property ourselves, as we did for our previous two houses. This would give us the room to sell for less than many of the comparable homes in the area.

Also, and perhaps I missed it, but did you consider the taxes payable on the rental income? Ideally, if renting, wouldn’t it be best to have a mortgage on the house being rented vs on your own home, that way the interest offsets the rental “profits” a little. I don’t know enough about renting to be sure how such things work.

Regardless, good luck whichever way you go.