I just started with some tenants on this type of contract on one of my properties, and I truly believe it's predatory lending.
The returns are sky high (for now), and frankly, there is no situation where the tenant will win.
Either they can't afford it and we keep their deposits, or they buy the house at a price that we had deemed to be acceptable (ie. guaranteed profits). I've been told only a very very small portion of these rent-to-own contracts actually go through, and it's no big jump to see why. The type of people that can't get traditional financing aren't suddenly going to shape up in 3 years and have enough money for that massive downpayment.
After this one as a learning experience, I don't think I can keep doing this type of thing with good conscience.
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