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Replies (30)
- MORTGAGE OPERATOR
- Contributions:2081
If you have an honest seller you can be OK.. but if the seller doens't pay his mortgage... your rent money/deposit will be lost.
Usually you'll sign a contract with an option to Purchase at the End of the lease for the Price you and seller agreed when signing it.
Depending on the contract...the seller might offer you to Credit your deposit and part of your rent towards the Down Payment of the house.
Usually you'll sign a contract with an option to Purchase at the End of the lease for the Price you and seller agreed when signing it.
Depending on the contract...the seller might offer you to Credit your deposit and part of your rent towards the Down Payment of the house.
- LongIslandBubble
- Contributions:2793
Don't bother with it unless they are willing to sell it to you for what it will be worth at the end of the lease.
Don't be fooled with deals like this; they are just trying to make it seem like a better deal than just renting, usually it is not.
Don't be fooled with deals like this; they are just trying to make it seem like a better deal than just renting, usually it is not.
- Mike2020
- Contributions:736
NEVER rent to own. Do a google search on the shaddy practices.
- Aldreth
- Contributions:4226
More often than not, RtO is a horrible idea.
- Jeri, "Aratinga"
- Contributions:436
Bad idea in a declining market like this, for a couple of reasons:
1) The contract will require you to agree to the purchase price now, and you can bet the owner/landlord isn't going to agree to a price that's less than what he thinks the value is now. The value of the home will continue to decline, and you'll be locked into paying more than it's worth at end of lease or walking away.
2) The owner/landlord may have absolutely no intention of continuing to make his mortgage payments on the house once you sign the lease. He'll just pocket your deposits, rent, and any additional amounts you're putting toward a down payment for several months, then he'll declare bankruptcy and let the house be foreclosed on. You get kicked out (or if you're very lucky the bank will allow you to stay until your lease expires) and you lose your down $$ and deposits.
1) The contract will require you to agree to the purchase price now, and you can bet the owner/landlord isn't going to agree to a price that's less than what he thinks the value is now. The value of the home will continue to decline, and you'll be locked into paying more than it's worth at end of lease or walking away.
2) The owner/landlord may have absolutely no intention of continuing to make his mortgage payments on the house once you sign the lease. He'll just pocket your deposits, rent, and any additional amounts you're putting toward a down payment for several months, then he'll declare bankruptcy and let the house be foreclosed on. You get kicked out (or if you're very lucky the bank will allow you to stay until your lease expires) and you lose your down $$ and deposits.
- Alan May
- Contributions:4377
1) typically it's a lease-OPTION... so you have the option of purchasing, not the obligation.
2) yes, this is a serious issue, but be mitigated by having a RE attorney write the contract, and require proof of monthly ongoing payments.
btw... the bank will ALWAYS allow you to stay until the lease expires... because the new owner (whomever that turns out to be) must always inherit the leases that the original owner agreed to... (presuming they're legal leases)
2) yes, this is a serious issue, but be mitigated by having a RE attorney write the contract, and require proof of monthly ongoing payments.
btw... the bank will ALWAYS allow you to stay until the lease expires... because the new owner (whomever that turns out to be) must always inherit the leases that the original owner agreed to... (presuming they're legal leases)
- pub123
- Contributions:660
I was asking becaue I was debating if I should rent to own my house because I cant sell it I thought maybe someone would want to rent to own
elvis:
Foreclosure ends the lease... The banks might or might not allow the renter to stay...While a purchaser has to honor a lease, the bank does not, their lien was public knowledge prior to the lease, is recorded, and if they act on it it ends the lease... Otherwise anyone going into foreclosure could suddenly write a 100 year lease on their property at a nice rent to a friend or something...
Foreclosure ends the lease... The banks might or might not allow the renter to stay...While a purchaser has to honor a lease, the bank does not, their lien was public knowledge prior to the lease, is recorded, and if they act on it it ends the lease... Otherwise anyone going into foreclosure could suddenly write a 100 year lease on their property at a nice rent to a friend or something...
- 2 Big 2 Fail
- Contributions:0
Renting to own can be a good idea so that this way you will know of any flaws the house has. Not everything comes up during inspection.
- Robin Lynch, "robin398"
- Contributions:1935
When you rent to own then you put more money toward the rent and the rest of the money would be put toward a down payment of the house until you have enough money saved to cover your deposit. Then the money would be put toward paying off the house.
virtually every person I have seen offering "rent to own" is basically running a scam; the price is higher then could be negotiated, and/or the rent is higher then market rent...
Furthermore, in a declining market, locking in today's price, as mentioned above, is not a terribly clever idea...
And, most people who go this route, do so due to bad credit... In 1 or 2 years, it is sort of unlikely most of them will improve their credit, some other disaster will come along...
Buying today seems to me to be a bad idea; However, if you must, just buy then... If you can't then rent; Tossing option money away today to lock in a price that will likely fall... Hey that reminds me, I have a condo! anybody want to rent to own it? i changed my mind its a great idea to do it today!!!! hurry!!!!
Furthermore, in a declining market, locking in today's price, as mentioned above, is not a terribly clever idea...
And, most people who go this route, do so due to bad credit... In 1 or 2 years, it is sort of unlikely most of them will improve their credit, some other disaster will come along...
Buying today seems to me to be a bad idea; However, if you must, just buy then... If you can't then rent; Tossing option money away today to lock in a price that will likely fall... Hey that reminds me, I have a condo! anybody want to rent to own it? i changed my mind its a great idea to do it today!!!! hurry!!!!
Rent to own in this market is a back door way to get full value for a house that will never be worth that in 3 years.
If the seller agrees to sell it for what its worth 3 years from now, then fine.
And as stated earlier, make sure the seller PAYS the mortgage with your 'rent' payments.
If the seller agrees to sell it for what its worth 3 years from now, then fine.
And as stated earlier, make sure the seller PAYS the mortgage with your 'rent' payments.
- BuyEqualsRent
- Contributions:1491
Just like with furniture, rent to own is almost never worth it.
- klarek the realist
- Contributions:7044
It sounds like an awful idea, especially in this market.
Buyer: "Hi, I'd like to own the property in 2009, but I'll pay the 2007 price."
Seller: "Great! It'll be worth half that by then, sign here please." LOL
Buyer: "Hi, I'd like to own the property in 2009, but I'll pay the 2007 price."
Seller: "Great! It'll be worth half that by then, sign here please." LOL
- Alan May
- Contributions:4377
>>Foreclosure ends the lease... The banks might or might not allow the renter to stay...While a purchaser has to honor a lease, the bank does not<<
I stand corrected... I was not aware of that... (nor do I understand how the bank could superscede an executed lease.... but hey... I am NOT a lawyer!!)
I stand corrected... I was not aware of that... (nor do I understand how the bank could superscede an executed lease.... but hey... I am NOT a lawyer!!)
elvis:
What i was told, was that the lease date is after the lien date, thus the lien takes precedence; Since it is a public record, it is assumed the renter is aware of and thus has an inferior claim to the lien...
But in practise it makes sense, otherwise prior to foreclosure anybody could tie the property up for years with a long term lease...
What i was told, was that the lease date is after the lien date, thus the lien takes precedence; Since it is a public record, it is assumed the renter is aware of and thus has an inferior claim to the lien...
But in practise it makes sense, otherwise prior to foreclosure anybody could tie the property up for years with a long term lease...
- Alan May
- Contributions:4377
oh... the lien being the initial date of the loan!? That makes total sense...
I stand corrected and educated...
thank you!
I stand corrected and educated...
thank you!
- Alan May
- Contributions:4377
>> you mean lis pendens date maybe<<
see, now that's what I would have THOUGHT, Durenda... but Azrob is saying that the original lien takes precedence... 'cause if it were the notice of lis pendens, then you could have tied up the property for years, simply by leasing it out for a 10 year lease.
see, now that's what I would have THOUGHT, Durenda... but Azrob is saying that the original lien takes precedence... 'cause if it were the notice of lis pendens, then you could have tied up the property for years, simply by leasing it out for a 10 year lease.
- Terri Linnell, "DebtsNMesses"
- Contributions:6728
Why pay today's price for tomorrow's interest? Wait for tomorrows price for tomorrows interest. My landlord offered me a 'land contract'. I asked him if his loan was assumable, he said no. I replied I can't promise a price for today when tomorrows interest may be significantly higher. Just as well. This house is now worth 50K less! lol
- Jeri, "Aratinga"
- Contributions:436
Pub, if you're the potential owner/landlord in a lease-option, then here's an article you should read:
http://leaseoptions.bobbruss.com/leaseoptions/
Bob Bruss (who wrote a long-running syndicated column on real estate) was a true believer in the benefits of lease-option buying and selling.
http://leaseoptions.bobbruss.com/leaseoptions/
Bob Bruss (who wrote a long-running syndicated column on real estate) was a true believer in the benefits of lease-option buying and selling.
- Nathanael Stover
- Contributions:1
Lease Option is a great way to sell a house. Be sure to do your due diligence first. Get advice from someone who has succeeded with Lease Options. Many people are willing to give advice, but you want to find people who have succeeded at what you want to do.
God bless.
God bless.
- Angelique01
- Contributions:2031
There's another one I'm seeing a lot of lately: "Seller will carry 100 percent financing." The prices of the houses that I've seen like this are all priced about $100 per sq. ft higher than others in the same areas. Whatever works, I guess
- Greg Brown, "Clean Slate Homes"
- Contributions:4
Lease purchasing can be a saving grace for many people as long as they aren't dealing with a fraud. For this specific reason you should only look to do business with a Certified Lease Purchase Consultant. They are members of the National Associtation of Lease Purchase Consultants, (NALPC) and must adhere to the code of ethics in addition to being held accountable for their actions. The also must complete a training period and pass the exam. Only then can I assure you that you are dealing with someone who can help and not hurt your situation.
In a time where it can take over 10 months to sell your home with a Realtor and only wait to find out that the deal falls through because the mortgage industry is at a virtual standstill, there is no better time to inquire about whether a lease purchase might benefit your situation.
- 2 Big 2 Fail
- Contributions:0
Rent to own: When a delusional seller meets an unqualified buyer.
- Jarrod Chambers, "Gallo de fuego"
- Contributions:1945
"Rent to own: When a delusional seller meets an unqualified buyer."
haha, yeah.
- Greg Brown, "Clean Slate Homes"
- Contributions:4
All you have to do is find someone who is reputable to help you structure the deal. Anyone who is a professional lease purchase consultant will tell you that we can work with your bad credit, no credit or low down payment and get you into a home today that you can buy in the near future.
We have a credit repair specialist who is a mortgage banker and yes we will run your credit before we show you a single house, however, we are not looking to deny you of anything. The reason we run your credit is to see if we believe that you can qualify at the end of the lease period or not. If we don't think so, we don't lead you to believe any different. As for the downpayment a reasonable amount is $5,000 as if you can't come up with that amount, we don't feel you would be very well suited to be a homeowner anytime soon. If you have a strong job and can verify your income we have the solution for you. If you simply cannot afford the home or cannot obtain your own mortgage at the end of the lease we will not recommend it to you. Buyer beware we have heard many horror stories and have started the National Association of Lease Purchase Consultants for that reason. If you want to protect yourself make sure you deal with a Certified Lease Purchase Consultant as they are bound to the strict code of ethics and are held accountable by the NALPC.
- GravitonX
- Contributions:3
I've known several lease-to-own deals that have worked out well for both the buyer, who typically needs to unload the monthly debt burden but doesn't want to go into foreclosure, and the seller, who typically may have had a bankruptcy, thus clearing their debts and has sufficient income but has trouble obtaining market financing due to their credit. So, I'm a little baffled by the comments here. Though most of the comments seem to come from 1.) Someone who has never seen a lease-to-own transaction and is simply regurgitating hearsay 2.) Are generally negative about any creative buying options (ref 1), the lease-to-own transactions I have seen have, so far, worked out well for both parties.
It goes without saying that in any real estate transaction that the parties involved have to be ethical and diligent. I've seen plenty of straight market purchases that ended up to be sucker deals because the seller concealled one thing or another or because the buyer was too eager to purchase the property and overlooked major issues, so as in all real estate transactions, caveat emptor.
- amaryllism
- Contributions:183
btw... the bank will ALWAYS allow you to stay until the lease expires... because the new owner (whomever that turns out to be) must always inherit the leases that the original owner agreed to... (presuming they're legal leases)
leases are not inherited. leases are between one person and another person. once one person leaves the lease, lease over. shouldn't an agent know this?
- Lshashab
- Contributions:94
we were in a lease/option for 18 months. at the end of the 18 months the house was worth 70k less than the price we agreed to so obviously we didn't want to exercise our option. We lost our 5k but it was worth it. I think the owner was totally bummed.
- Mark Howard, "opalhoward"
- Contributions:10
I'm an individual homeowner and have rented my single family home out on a lease-to-own option.
I agree here with some of the people....the seller (me) has to be honest. I send my renter a monthly "statement" showing how their rent bonus $ is growing AND collecting interest.
Sure, we had to agree on a purchase price of the house before we both signed. The renter can walk away from that contract at any time (forfeiting his bonus/deposit) but I cannot walk away. I guess I could declare bankruptcy...so this is where the honesty of the seller comes into play.
I charge my renter more than market rental, and place the "extra" into a seperate interest bearing account for the renter. The base rent charge is sent to my bank as my mortgage payment.
rent to own
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