Rent To Own, what is it and why do we prefer to rent using this method?

#IzmahShavuot Efi Danieli, #Post5

I have a feeling that yesterday's post was too long and it was difficult for people to read it, so today's post will be much shorter?
One of the things that makes real estate investment in the US interesting and attractive,
It is the sophisticated market that enables all kinds of solutions that have never been heard of in Israel and gives us the possibility on the one hand to earn a lot from real estate transactions and on the other hand,
Allowing the locals the opportunity to enter their own home
Where the banks would not approve the loan
Whether it's because their credit rating is low,
Or the value of the property is below the minimum level of the banks for granting loans
or other reasons.
So what is Rent To Own?
I will explain this using an example of a deal we actually did.
In one of the property portfolios we purchased in Dayton Ohio, a tenant became vacant,
We immediately advertised the property for rent with an option to purchase
The contract is for two years when at the end of the two years the tenant purchases the property at a price and interest known in advance
what?
How do you lock in a price in advance? And if the prices go up?
If he stops paying?
Let's make order.
The guy wants to buy the house. He does not have a sufficient credit rating to get a mortgage from the bank.
We rent the house to him on a two-year contract where he is guaranteed a pre-determined purchase price at the end of those two years.
That is, the tenant pays a small down payment (several thousand dollars), pays the rent every month, and at the end of the period can buy the house for a predetermined amount.
The interest we charge is over 8% annually and the price of the property
What is our advantage?
We have no repairs and no administration costs.
The tenant renovated the house at his own expense (it's going to be his house..)
The sale price of the house is much higher than the price we bought it for and we receive a higher income every month following section 1.
Are there also disadvantages to this?
So the main disadvantage I see in such a deal is that we don't have enough buyers like this
And this is indeed a disadvantage if you plan on it as a work method
(Perhaps now, with the increase in interest rates, there will be more who will not get a mortgage and will turn to this path)
And there is also some kind of bet here for the loss of a potential increase in value
(After all, I'm closing a price for the next two years)
But that doesn't interest me, because I don't work on speculation
and would rather make a good profit in advance than lose a good deal
Because maybe I could earn more.
I owe you an answer to what happens if he stops paying,
So, if he stops paying,
We take his house back and replace him with a new tenant
(There is of course a legal procedure here, but it is not complicated in the countries we work in).
At that time, we received an advance of $3.5K,
We got a renovated house,
We made more money on the rent because we saved management and repair company costs
And we do the same with a new potential buyer.
In the photos, the state of the house as we have transferred to the buyer at Rent to Own, he is a person with good hands who knows how to renovate himself, so we do not shy away from it
what do you think? Would you do such a deal?