Rent to Own Home Home & Garden

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  #1  
Old 09-26-2009
MrsBeasley MrsBeasley is offline
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Join Date: Sep 2006
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Default Topic: Rent to Own Home

Rent to Own Home

Has anyone either bought or sold a home using the Rent to Own option. We are seriously considering this option if our home doesn't sell by the closing date of our new home. Any advice/information would be appreciated.
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  #2  
Old 09-26-2009
Blazingsun Blazingsun is offline
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Join Date: Mar 2007
Posts: 224
Default Topic: Rent to Own Home

You know Mrs B i was going to suggest that option to you! The situation your in is no fun at all. I believe the idea of "renting to own" is that your taking a portion of their monthly rent and putting it towards a downpayment later on down the road.

I am not 100% sure on that. The good thing about renting to own (for the tenant)is that your likely giving a person who wouldnt be able to get a mortgage otherwise the chance to prove themselves. I do think however that for you it can be a bit risky.

If you do go this path I would make sure that they know they are required to pay all utilities, maintenance, lawn keep/snow removal.
-You should do a reference check
-Ask for proof of employment (make them get a letter from their employer, this is standard for people who have bad credit but want a car loan)
-make sure you get your lawyer to read over the contract. The last thing you need is to be screwed over.

Screening responsible tenants with "so-so" credit i believe would be a wonderful thing for you to do for someone else. However its important to watch out for your own family first and foremost.

I am very curious to hear if anyone knows the legistics of something like this and how can one guarantee that they will then "own" and you will not.
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  #3  
Old 09-27-2009
Bill Bill is offline
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Join Date: Apr 2006
Posts: 258
Default Topic: Rent to Own Home

Rent to own

I think this would be much the same as holding the mortgage yourself, the "rent" would be applied to the purchase value, and the advantage is you make the interest rather than the bank so a much higher return then a straight purchase/sale. The downside is if they bail you have the house back and if you’re still carrying a mortgage on it the responsibility for it. You would need a lawyer designed purchase/sale agreement to make sure all the i's are dotted and t's crossed. There is without question a good deal of risk involved on your part and you would need to be able to carry on if "worst case scenarios" happened. You could make it very simple for you and very advantages to the purchaser by just reducing your purchase price by the amount of the rent every month (ie 100 thousand house 800.00 rent next month the price is 99,200.00 next month its 98,400.00 etc) but this offers you no protection and no "profit" (interest) nor does it account for the value of the property going up over time, and could get very complicated who pays the taxes, water/sewage etc would the tax bill still be in your name or the purchasers, if in the end they decided they didn't want it would they get some or all of there purchase back (rent) or could the "sell" there purchased portion to someone else and leave you with someone in your house you never intended.....etc

Bill
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  #4  
Old 09-27-2009
bradorna bradorna is offline
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Join Date: Jul 2006
Posts: 682
Default Topic: Rent to Own Home

My brother did a rent to own set up. In his case he did not have a down payment for a home so the years rent was considered the down payment. Before he moved in he did get a pre approved mortgage for the amount owing to the home owner at the end of the year. I'm not sure if this is how all the rent to own deals work or not.
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