[legion]

Rob, have you had any rent-to-owns successfully complete the purchase?

Here are my thoughts:

1) Ask for 5% - 20% of the value of the house up front. This will be forfeit if the purchase is not completed. (I fully expect this to kill the deal right there. I think it's reasonable to assume that these people want to do a rent-to-own because their credit is not in good shape and they probably don't have any money saved.)

2) Run credit reports and do income verification on the applicants.
Charge an application fee.

3) Charge a rent above current market rates. This is to compensate me for taking the house off the market, and so that there is some money from the rent that is being used to build equity in the house. Any accumulated equity will be forfeit if the purchase is not completed.

4) Agree to a purchase price and a term up front. Don't make the term any longer than 3 years. The agreed-upon price should take into consideration the equity that has been "earned" through higher-than-normal rent payments and appreciation of the house over that time. Give the "renters" a year to complete the purchase.

5) Go into the agreement understanding that a purchase probably won't actually happen.

6) Refinance the house to minimize the monthly payment and pull out as much equity as possible. Hopefully this money + the money from #1 above approximates what I'd make in a normal sale.