The ad says all your rent counts toward the purchase, which doesn't add up

The advertising is the tell more than the 7.4%. "All your rent counts" and then it's $300 of $2,300 means somebody wrote copy they knew was wrong. That's the person you'd be relying on to honor a 24 month agreement.

On the price itself, 7.4% over two years isn't crazy on its own. Both sides are guessing about the future and the seller wants to be paid for holding the price. What matters more is whether $365,000 will appraise in month 24, because if it doesn't, your lender won't lend to it and you're short the difference in cash.

I had a tenant-buyer on a small house go 20 months and then not qualify. Self-employed, income was fine, documentation wasn't. He lost his fee and I felt bad and it was still the correct outcome under the agreement.

The thing that would have saved him: getting in front of a lender in month one instead of month twenty. Go now, before you sign, and ask a lender what you'd need to close in 24 months. If they say your file is basically ready and you're just saving, a lease option might be the wrong tool because you could just buy. If they say you need two years of something, you've learned what the clock is actually for. Get whatever they tell you in writing, because terms move.

Also ask who's on title today and whether there's a mortgage on it. Ask for the payoff situation. If the seller stops paying their loan during your 24 months, your option is worth very little.

@quarry the title question is the one I'd lead with. I've got a spreadsheet of listings and about a fifth of the rent-to-own ads I've saved were posted by someone who doesn't appear to own the property at all.

Your arithmetic is right and it points at the real question. $17,200 of credit against a $365,000 strike leaves roughly $347,800 to finance in month 24, which is above the $340,000 the house is said to be worth today. So the deal only works for you if either the market moves up or you're happy paying above market for the time you bought.

How to test the three things you asked.

The option fee. It's ordinarily non-refundable, and that's the point of an option. What you can negotiate is what it applies to and under what conditions, including whether you get an extension for an additional fee if financing isn't ready. Ask for that extension mechanism now, in the document, because it's the moment most of these arrangements fall apart.

Repairs. There's no default answer. The agreement assigns it. A common split puts routine items on the tenant-buyer and major systems on the owner, with a dollar threshold. Get the furnace, roof, and water heater named specifically rather than described as "major."

The 7.4%. Judge it against what you'd otherwise pay to rent plus what the option is worth to you. You're paying about $250 a month over market rent plus a $10,000 fee at risk, so call it roughly $16,000 over two years for the right to buy at a fixed $365,000. That's the price of the option. Whether it's fair depends on your view of where values go, and nobody here can tell you that.

Two structural points. The option to purchase should be a separate contract from the lease, which is standard practice and protects both sides. And whether you can record a memorandum of the option to protect your interest against later liens depends on your state's recording rules, so ask a real estate attorney licensed there before you sign.