Does anyone know about rent to own a home?

Question

My husband and I have a very good income combined. We have been paying back debts and therefore not much saved for a downpayment. We have been renters for many years. I am a bit skeptical of scams relating to this matter.

Answer 1

Rent to own is something that would be worked out with the owner of a property. This might be a good time to be able to get an agreement like that, since in many places houses are not selling well and a seller who needs to get out from under payments might be willing to agree.

Suggestion: check around for properties "for sale by owner" and if you like the house, ask them if they would consider rent to own.

Answer 2

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Answer 3

Rent to own programs are indeed an excellent way to get started after retiring burdening debt. The key to those programs is working with a licensee who is familiar with the intricacies of the paper work and has knowledge of how to structure the programs with an eye in protecting the buyer and seller from accidental and on purpose issues that can affect the parties to the transaction.
There is basically two programs in "Rent to Own"
1.) Rent with an option to purchase which basically calls for the owner of the property and you to structure an agreement that calls for the creation of a rental agreement which will allow you to begin renting the property now and a purchase agreement in where you and the owner agree now on how you will buy the property on a predetermined date in the future. These types of agreements call for you to pay the rental cost as rent cost only and a predetermined monthly amount which will accumulate towards the downpayment called for in the purchase agreement that you will exercise in the future. If you opt not to exercise the purchase when the time comes for you to do so then the additional amount you have been paying becomes the same as if you had been paying it towards rent only.
2.) Rent with the right of first refusal. Unlike the rent with an option to purchase no separate agreement is needed. This program allows you to create a lease with a clause on that lease that stipulates that the owner can not sell the property to another without bringing you any offer they may get in the future from other buyers and that they are willing to accept, so that you can match it and buy the property. Usually a one time set price for this option protection is paid by the renter besides the regular rent amount.
Since there are tax advantages to a property owner who does not qualify for the one time tax exception and the current market need to establish income to a trouble property these programs are again resurfacing as the did when the oil & gas industry collapsed and the savings and loans fiasco occurred back in the 80's. Given the current tightening of the lending industry these programs are usually coupled with owner financing and a short term 5 to 10 year ballon on the owner financing.
It is very important that a licensee and or an attorney have a hand in structuring the paper work for you.
Best of luck to you

Answer 4

You are renting to own. You usually accrue no equity in the house until you have it payed off. You will pay more for the house this way than if you bought it with a mortgage.
Honestly most of the time the people pay more than they would if they just rented the house and end up not staying long enough to own the house so they just lose out.

Answer 5

You have a number of options ahead of you. If you haven't owned a home in 4 years you can qualify for a 'first time home buyer' program. Involves no money down. If you have your debts paid off then you might consider saving for 6months to a year. The housing market isn't suppose to stabilize till 2009 so you have time to find the right house. Hope this helps

Answer 6

Rent To Own Home - http://RentToOwnHome.uzaev.com/?EIgm

Answer 7

If you are planning on staying in the same home, you are looking for a lease option. Basically, you sign a contract for an agreed payment a month for usually a year.

At the end of the 12 months, you can use your receipts and land lord rating to up your credit rating and qualify to get a mortgage for the property you are residing in.

Usually this is done for an FHA loan.

Jeff

I am not an attorney and information is for instructional purposes only.

Answer 8

The very "category" of this topic is quite misleading, so I'm not surprised that you're confused. Renting and Real Estate are NOT synonymous (the same thing) and they really shouldn't be categorized together. Renters, as I'm sure you know, can have a hard time getting out of debt and getting a savings built (any kind of savings -- whether savings built up in a bank or in a piece of property). . . unfortunately, the details about questions like yours are the ones that Real Estate People either don't want you to know, or that they want to charge you *lots* of money to know! This is what I have come to learn through my MBA education and from the three Real Estate Law exams I have passed (98%): real estate brokers and agents get paid WAY too much for exploiting poor people (AKA people who rent), and this is why I could not personally/ethically become one of them:

First of all, you don't "rent to own" a home. If you don't have a lot of money saved up, you apply for a loan to _purchase_ a home. You can even apply for your loan online: sites like http://www.lendingtree.com/ (Lending Tree) are a good place to start, because some banks actually *compete* with each other to give you a loan. You pay a mortgage instead of a rent: if you are indeed a first-time home buyer, there are numerous benefits available to you in the form of tax-savings. (Indeed, poor renters get no tax savings from renting and that is usually why they have such a hard time getting out of debt).

If you are skeptical of scams related to this issue, be *very* careful in dealing with real estate agents, especially those real estate agents who attempt to talk you into a contract. Real Estate People are like scavengers . . . waiting on the sidelines, wanting to steal as much of the amount you stand to save (amount saved by not renting) and as soon as possible with contracts. They will use every trick imaginable, pressure tactics even, to convince you that using an agent is beneficial, but it is NOT. Agents work for brokers and brokers (by definition) already have interest in a *lot* of properties. Avoiding both will save you lots of money.

Look into homes that are "For Sale by Owner" (FSBO - try to find the ones that people have lived in for a long time, not some recent bank foreclosure or an empty house that is "For Sale by Owner" -- a pretty good sign that it's one a real estate person owns as a second or third or twentieth home) in the area that you want to live.

If at all possible, avoid agents *completely*, and talk with the owners themselves. Find out why they're selling their home and discuss how much you'll both be saving -- as in Actual Dollar Amounts -- by eliminating the middle-persons (buyer's agent and seller's agent). Remember, there's no such thing as (for all practical purposes) a Real Estate Person (agent or broker) who rents. They don't get people in houses to be "nice" -- they do it because they get paid thousands, and oftentimes tens-of-thousands, and even sometimes *hundreds of thousands* of dollars per MONTH as Real Estate People: remember that it is NOT NECESSARY to use an agent or a broker to buy (or even sell) a home.

Do as much research as possible on your own. The Internet has a lot of resources available to you. Check http://realestate.yahoo.com for your city to get an idea of the prices of homes that have been selling for (but also keep in mind that most of those prices probably include an agent's commission, which by definition, already includes a broker's commission -- and you should NOT have to pay either). Avoid agents and brokers (Real Estate People), and by doing so you will save enormously both in the short-term and in the long-term, both in value of the home itself and in the tax benefits of owning a home.

If, for one reason or another, you are indeed forced to use an agent or an agent's brokerage, remember that there is NO STANDARD percentage that you have to pay in commission. Just because they have a pre-printed form with a number filled in, that does not mean it's standard or a law. Beware and be wary of the "Six percent" figure that Real Estate People are so fond of quoting (because indeed, the brokers and agents often like to split this amount in half without you knowing). If you are indeed forced to use an agent or an agent's brokerage, remember that everything in a real estate contract is negotiable. Remember, legally you don't even need to use an agent or that agent's broker or that agent's broker's PAPERWORK when deciding to buy a home.

Some things really are more efficient without the middle people and their paperwork.

Hope this helps! I wouldn't write all this out if it weren't something I believe very strongly in -- Real Estate People (agents and brokers) are _all_ grotesquely overpaid at the expense of the little people.

P.S. I know this will get thumbs-downed by Real Estate People = AKA people who make $$$ from buying and selling multiple properties, AKA people who rent out properties -- thus proving my point that my typing this all out, for free, is utterly detrimental to the greed of Real Estate People, and therefore is it beneficial information to those people who pay rent. I believe that the asker of this question stated her situation quite plainly.