can one rent to own a house or how does that work is there any down falls into that. will like to get some information.
2007-08-01 14:57:12 · 6 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
Rent to own is probably the most misunderstood type of transaction there is. In fact it is very simple if you know what forms are required to be used in your state. They are done when the buyer negotiates for it or the buyer can not come up with the regular bank requirements to get a loan and pay off the seller. Basically there are two types of rent to own:
1.) Rent with an option to purchase - This is where you create an agreement stipulating that you will rent and you will be given the right to purchase the property. This is done by creating:
a.) the agreement stipulating the rent to own transaction
b.) the rental agreement stipulating the terms of the rental and the amount of monthly, or other mode, payment
c.) an offer to purchase agreement stipulating the terms that the buyers and sellers agree to now when the buyer/renter will exercise the option to purchase stipulated to in the agreement and in the future.
Usually there is a monthly rent amount and another amount which is paid with the rent allowing the renter/buyer to accumulate a downpayment as stipulated in the offer to purchase and to be exercised in the future.
2.) Rent with a right of first refusal - This is where a rental agreement is created and a clause showing terms and conditions for a right of first refusal is added to the lease. This allows the renter to be protected in that they make an agreement with the seller/owner to promise that if an offer is made to them by someone else and they are willing to accept it they will promise you to bring you the offer and have you either match it or refuse and continue to rent. There is usually a price, set for this type of protection.
It is extremely important that the paper work be done right so an attorney and a real estate licensee specializing in that field should be contacted.
Best of luck to you
2007-08-01 15:11:29 · answer #1 · answered by newmexicorealestateforms 6 · 1⤊ 0⤋
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2016-09-10 06:12:31 · answer #2 · answered by Mitchell 3 · 0⤊ 0⤋
Rent to Own is when there is no Option to Purchase and the monthly rent is actually going towards the purchase price while the owner is holding the mortgage. The more likely scenario is a Rent with Option to Purchase which locks in a purchase pice and you have the option to buy the home within a certain time frame. Typically a percentage of the rent would go towards the purchase price should the renter decide to act on the option to purchase. You can learn more about this subject at www.prorealtyteam.com
2015-12-22 21:01:53 · answer #3 · answered by David B 1 · 0⤊ 0⤋
This is rarely a good deal for the buyer. The seller writes a number of contingencies in the contract to protect their property, you make a mistake and the contract is cancelled. You essentially rented the place for no return.
Acermill is correct also, many unscrupulous "sellers" that are in trouble take advantage of those that don't qualify for a mortgage, enter a rent to own contract, only to allow the house to go into foreclosure.
Many sellers that offer rent to own want a significant down payment and a good credit check. Most of those buyers would qualify for a mortgage.
If you do decide to enter a rent to own deal, spend the money and have a RE attorney review the contract.
2007-08-01 15:08:40 · answer #4 · answered by godged 7 · 0⤊ 0⤋
The most important thing to insure is that you are properly and legally covered in such an arrangement. More than once, I have seen, in this forum, some poor soul who has invested good money into one of these rent-to-own deals, only to discover that the current owner is taking the money and not making mortgage payments, thus exposing the property to lender foreclosure. If you are not legally covered in this scenario, you will only have a pile of VERY expensive rent receipts, and the lender will foreclose on the property.
2007-08-01 15:04:11 · answer #5 · answered by acermill 7 · 0⤊ 0⤋
Rent to own can be VERY expensive, and there are many people out there that will take advantage of you. You must be able to make all payments on time every time otherwise you lose the "equity" you have built up towards the purchase.
If you let me know the city and state, I will give you the link for the laws regulating this for your area.
UPDATE
Sorry, forgot to post the link for more info on Lease purchase.
http://homebuying.about.com/gi/dynamic/offsite.htm?zi=1/XJ&sdn=homebuying&zu=http%3A%2F%2Ftms.ecol.net%2Frealestate%2Fleaseopt.htm
2007-08-01 15:02:15 · answer #6 · answered by halestrm 6 · 0⤊ 0⤋