timer Asked: May 23rd, 2015

Question description

Over the years, I have had many leasehold tenants in my Arizona rental home. As you know, I am not a real estate professional, nor do I have the time to actively participate in the maintenance of this property. All of the prior tenants have rented the home for 2 years or less. I was showing the home to a potential new tenant and they are very interested in the Arizona home, but they proposed a lease-to-own contractual agreement, rather than my usual year-by-year lease agreement.

I have owned the Arizona home since 12/31/1974, which is in a great neighborhood, and the home has not received any major remodeling. Even if improvements were made to the home, I don’t believe the improvements would contribute to (or increase) the home’s useful life. The useful life will come to an end very soon because the home’s foundation is unstable. 

The potential tenants would like to rent the home for the next three years, from 1/1/2015 to 12/31/2017, and the title would transfer on 1/1/2018. Before I accept their proposal, could you tell me how this lease-to-own agreement is different than my prior year-by-year lease agreements?  Will my bookkeeping & journal entries be different than before? Assuming yes, could you provide examples (and explanations) of the journal entries? Lastly, do you think this lease-to-own contractual agreement is a good decision? Are there any pros or benefits? Could this be a bad decision for me? Are there any cons or negatives?

Tutor Answer

(Top Tutor) Studypool Tutor
School: University of Maryland
Studypool has helped 1,244,100 students
flag Report DMCA
Similar Questions
Hot Questions
Related Tags

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors