I recently put my house up for lease and had a potential tenant inquire about this. Does the MT Board have any insider info on things I should know about going into this? Is it worth it, or should I just stick to finding normal tenants?
Well, do you plan on keeping the house? If the answer is yes, I would not do it.
Honestly, I probably would not do it anyways. I just sold a house last year and thats what they wanted to do. I made them sign the papers and they paid me rent for the 14 months they were in it. Had I done a rent to own deal, I would have gotten zero equity during that 14 months.
I believe what you are describing is what is known as a "contract for deed". As I understand it, for you the Seller it is basically just an agreement that you will finance their purchase over time. However, for the Buyer, they are taking a HUGE risk that you will actually have marketable title to transfer at the end of the payment period - after they are already out however many tens or hundreds of thousands of dollars. If the seller fails to pay his taxes or defaults on a different loan, that property could be subject to a lien and attachment from the other creditors - leaving your paying buyers with nothing and maybe even forced out of the property.
The only reason I could see a buyer suggesting this is that they have horrible credit and cannot get a loan otherwise, or that they are just completely unconcerned with their own financial protection.
If it were me I would steer clear of this and just rent the property or sell the property in the traditional and safer methods to avoid any issues in the future.