Mwass

if you sell the home to your tenants, on contract, you would be locking in a set price for the home and you would not have to incur time/expense of marketing it to other prospective buyers. you continue to own the home right up until the buyers make their final payment, in full. if the buyers break the contract, anywhere along the way, typically, you would be entitled to keep ALL of the money paid to you (even if it were 99% of the whole amount). you win, buyers lose.

if (when) the buyers stop paying, you can go to court to evict them and you can sue them for the breach of the contract. you would AVOID any of the formalities or costs or delays involved in foreclosing on a mortgage. its annoying, expensive and takes time, but much less so than if you sell the house outright and give the buyers a mortgage.

you state the most obvious "con" is in your question. if the buyers are not paying rent now, what would be any different if there were a sales contract? another disadvanatage is that you must continue to own the home, and manage all of this until the contract is closed. (i have had some clients sign 12 month contracts, others for 2 or 5 or 10 years). again, not substantially worse than managing the property as a landlord, but if you had a straight up sale, you would get all your proceeds up front, one lump sum, and you can wash your hands of the whole thing. its just neater and cleaner that way.

installment contracts of this sort are really, almost always, a transaction of last resort for buyers, more so than sellers. way too much risk for the buyer. i have only known one buyer in 23 years who actually completed a transaction. every other stopped making payments for one reason or another and lost everything they invested in their deals. - Thu Dec 11 2008, 06:45