What are the economics on a rent-to-own agreement? Agree on a purchase price, and rent a place whereby X% of the rental price each month goes toward reducing the agreed on price. Option to purchase the property at the set price after 1 yr, 2 yr, etc. of rental.
For the investor, it would provide the option for early liquidity, and for future homeowners this would give them a future house, plus eliminate all the noise around multiple competing offers since the renter would have ROFR to buy at the price minus the portion of rent money paid.
I'm interested in exploring in an arrangement like this. Seems like it can help people out while also providing a reasonable return. Investor essentially agrees to cap his/her gains due to the pre-set purchase price (if the house appreciates in value dramatically the renter will be in the money) in return for early liquidity (assuming most renters decide to exercise).
Does anyone want to do some back of envelope math to check this?
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