How do I identify homeowners that would benefit from doing a lease to own option on their house

Would it not be better for someone to offer their house as a lease to own than to face foreclosure?  Why is this not more common?  
  • March 30 2013 - Overland Park
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Answers (3)

Profile picture for wetdawgs
No, in most cases it would not be to the owner's benefit.   The ones you are more likely to find who would be willing to consider it are those who have a large amount of equity.   They are extremely rare options in the housing market.

  • March 30 2013
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I don't know, Annette. It seems to me that if you owe more than its worth, you're not going to find someone who will pay you what you owe on it.

Doing a lease-to-own just means kicking the can down the road - when the renter's option comes up, if the house isn't worth more than the seller owes on it, the renter isn't going to buy it then, anyway.

I think that's why it isn't more common.

All the best,
  • March 30 2013
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Profile picture for hpvanc
Realistically, the owner may have to subsidize the mortgage payment, in cases where the market rent plus the rent to own premium is not enough to cover the current mortgage payment.  Also as has been pointed out, if at the end of the rent to own contract the market is still lower than the mortgage the current owner can't complete the transaction without bringing more cash to the closing table. 

Rent to own or contract for deed has its place.  That place is primarily for unique or lower priced properties that will be difficult to attain financing on.  Even in those cases the owner has a much better shot of making it work if they can price to market.  Even under ideal circumstance there are complications that have to be dealt with, such as insurance, who is allowed to do what to the property, who pays the taxes, and etc.  When you have a mortgage lender involved, it makes it even more difficult, they may even have a clause in the loan contract that says the loan becomes due and payable immediately if you enter into a rent to own lease contract. 
  • March 30 2013
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