how does a rent to own work involving a house?

Answer 1

I don't know other states but in Texas they do not have a standardized contract for rent to own. It is normal that most of the "sellers" using this type of deal are scoundrels just wanting to get a higher rent plus a deposit and then never really let you buy it.

In the early 1900's Upton Sinclair wrote a book called "The Jungle" about new immigrants to this country and how they are cheated and mistreated and used. Teddy Roosevelt read the book and founded the food and drug administration because of the horrible things exposed about the food processing.

The book also outlined how "sellers" could use the rent-to-own scheme to cheat people. Read the book. Nothing is new, this can be a description of how you will be treated.

Answer 2

2

Answer 3

You need an agreement in writing. It may contain an expiration date for purchasing in that manner.
The owner may, or should, agree to apply at least some portion of the rental towards down payment, which actually reduces the cost of property.

If the option is taken before any expiration date, then it's a matter of whether the owner will carry the note, at least for a period of time. To do this, a sales contract is needed, although the owner will hold the deed in his/her name until it is paid, or, the buyer has obtained financing.

When a contract for sale is completed, the buyer is then responsible for maintenance and taxes. The owner may have the taxes included in the payments to insure that they are paid, and on time. Likely interest will be included in the note.

If the owner carries the note, likely there will be a termination date and the buyer must acquire a loan for the balance.

Answer 4

Setting the purchase price, applying the "Option Deposit" toward that price and offering "Rent Credits" toward the purchase price ALL violate the lender's Due-on-Sale admonitions. They can (and more increasingly do) call the loan due (accelerate the loan). Only if the property is owned outright by the seller (no mortgage) is this potential problem averted.

The PROPER way to do this is for the seller to place the property in a Land Trust with themselves as the beneficiary. They then name you as a co-beneficiary and you lease the property from the trust on a "triple-net" commercial lease basis. This way the seller doesn't violate the DOS clause, you get the active tax benefits (huge benefit for you) and (at least in my deals) you get 50% of the appreciation in the property (based on appraisal at time of purchase) since you first moved in as well as the 5% contribution to the trust you made up front.
This also protects the property from lawsuits against either party since you've effectively converted Realty to Personalty (except in LA and TN)since jointly owned personalty (beneficial interests in the trust) can't be divided to satisfy a judgement against one of the parties.

Answer 5

Rent To Own Homes : http://RentToOwnHome.uzaev.com/?qZCt