There are a lot of properties in the Fort Worth, TX area I have found that are rent to own. My fiance' and I wanted to get a cheap place so we could start saving to buy a house within the next couple years, but should we look into rent to own houses instead since we would be investing in a property, instead of strictly renting and our money going down the drain every month? Is it all too good to be true? What are the pros and cons, and what should we steer clear from?
2007-02-15 11:48:22 · 6 answers · asked by ac 3 in Business & Finance ➔ Renting & Real Estate
What your talking about is a lease to purchase contract. These can be a great boon to a prospective home buyer. A couple of things that need to be pointed out to protect yourself and insure you don't lose any extra money on the deal...
Get the price that the owner will sell you to fixed in writing at the time of the contract. You should get the house at this price regardless of how much it appreciates over the term of your lease option contract
A portion of your monthly rent should be placed into a pool that will be used for downpayment or closing costs when you execute your purchase option
ALWAYS pay ALL your payments by check. I can't stress this enough. Don't pay by money order and DON'T pay by cash. ONLY PAY BY CHECK! If you have 12 months cancelled checks and a lease purchase contract, some lenders will allow you to do the purchase as a refinance transaction which will make things much easier for you
Use your time wisely. Fix your credit. Go for the most recent things first and work backwards. Go to www.truecredit.com and get a copy of your credit report. You can dispute items online with that accoun. Don't worry about collections that are older than 12 months old. Have at least 3 open tradelines on your credit. Get secured cards if you have to as soon as possible.
Only thing I would warn you against is to make sure to take several close looks at your contract. Make sure it is fair for both parties and not just the seller.
Good luck on your future home purchase!
2007-02-15 12:28:59 · answer #1 · answered by Anonymous · 0⤊ 0⤋
If the rent on that house would normally be $800 per month, you are going to pay some higher amount, like $1200 per month, with the additional $400 supposedly going towards your down payment. You're still paying rent. All you've really done is locked in a future sales price and started paying towards the eventual down payment so you aren't really getting any equity in the house at this point until some later date with the actual sale goes through.
It's usually a pretty expensive way to get into a house. You'd be better off to rent something and put the rest of your money into safe investments and save for the down payment.
2007-02-15 12:15:08 · answer #2 · answered by Faye H 6 · 0⤊ 0⤋
No, its not a good idea. Usually the person that is offering the rent to own has gone to a distrssed homeowner and bailed them out in exchange for making the monthly pmts and any catch-up pmts neccessary. Then they charge you a down payment and call it rent to own. However you have no title to the property and if that person files bankruptcy or has student loans outstanding or has tax problems etc., you are the one that loses. This is essentially what used to be called contract for deed. but that term fell out of favor.
2007-02-15 12:00:55 · answer #3 · answered by Tommy 1 · 2⤊ 0⤋
I agree with Tommy.
Don't do Rent to Own, Contract for Deed, Owner Wrap, false "Owner Carry", etc.
2007-02-15 12:11:47 · answer #4 · answered by teran_realtor 7 · 0⤊ 0⤋
the only thing I know about these type of properties is that the rent is typically a little higher.
2007-02-15 12:00:19 · answer #5 · answered by Anonymous · 0⤊ 0⤋
YOU'RE FIRED!!
2007-02-15 11:55:54 · answer #6 · answered by ♥panicqueen♥ 5 · 0⤊ 0⤋