A good strategy for handling rental property that you wish to eventually sell is thinking about a rent to own agreement. This is a very appealing option for anyone who owns rental property regardless of how long they plan on owning it. The premise of the agreement is simple: You have tenants living in the property paying rent, and after a specified amount of time they end up owning it.

The easiest way to set up the agreement is by having the tenant pay the standard rent lease, while having a separate contract indicating an option to purchase the rental property over a set amount of time. This contract needs to have a set price for the property. Also, it needs to be slightly higher versus the current market value to account for possible inflation and appreciation.

If the tenant agrees to buy the property, then the price which was set at the time of the contract must be honored. Of course an alternate situation is that the tenant has no obligation to buy, but still an option to purchase the property if desired.

Most of the time rent to own starts with having a home that you are tired of managing and just really don’t need. At some point, selling the property becomes a thought. As soon as a tenant decides to move in, ask them if they would possibly like to purchase the property at the end of the lease period. If the answer is "yes" and they agree to a higher final price, they sign a one year lease and an option to purchase contract. The tenant then agrees to pay a slightly higher monthly rent amount. The higher amount includes the base rent plus a non-refundable fee which is for rent credit. This rent credit enables the tenant to build his credit, which can then be used to make the down payment or lower the final purchase price.

If at the end of the lease the tenant does not want to buy the home, the extra built in fees are non-refundable and are yours to keep. As an option in the contract, a time extension can be added for the tenant to better qualify his home purchase. If this occurs, adjusting the final price of the home is fair to account for the months or years that have passed.

Either option you choose, both will work to your advantage if you want to sell. It is possible to make a high return on the rent credits or you can simply sell the property. Aside from the financial rewards of selling a rental property, you could possibly be helping someone acquire a home that they might not have been able to afford or qualify for.