i was going to reant a house then the landlord said i could lease with option to buy .... is that a good idea?

Answer 1

Use caution when approaching such a situation. There have been some sad scenarios in rent to own. If the landlord has any outstanding mortgage on the property, insure that your agreement contains a proviso in which you pay your 'rents' with two separate checks, one of which is made payable to both the landlord AND the mortgage holder, in the amount of the monthly payment due.

I've seen more than one situation where the renter paid faithfully, only to discover that the seller/landlord was pocketing all the money, not paying the mortgage, and the property ended up in foreclosure. In such a situation, the renter has ZERO protection unless handled properly.

As well, if you enter into a rent to own, a regular check of the title deed to the property at the local land office is advised, to insure that the seller has not taken out any subsequent mortgages which could result in the same sad ending.

Answer 2

It could be if you realize a couple of things. First, the purpose of a lease option is for people who cannot qualify for financing. This usually means you have bad credit. The only way you are actually going to get the deed to this home is if you eventually finance it - and lenders will want to see your track record with making the lease option payments. So don't do it if you can't afford the payments - it won't do you any good. (By afford, I mean that your payments should be around 35% of your income - the generally recommended number).

Secondly, those lease option payments don't actually go towards the house UNTIL you have completed the contract and are able to finance the house. If you back out of the deal, or don't live up to it - then all that extra money you spent is gone (it was only to pay for the OPTION to purchase). So again, make sure this is what you want to do.

Thirdly, understand what price you are buying - and understand what the market is doing. Whatever price you are buying at - you won't be financing until the end of the lease option contract. So if the housing market is declining, and the house is worth less than your purchase price at the end of the contract - it is going to be difficult to find a lender to finance that purchase. Make sure you are getting a sensible purchase price.

Finally, understand what interest rate you are getting. Another reason that purchase options are good, is that you will build up a down payment through your monthly lease option payments . Unless the lease option has a terrible interest rate - then you may only be keeping up with the interest payments, and making very small additions to your down payment. Understand your interest rates.

The purchase option is a powerful tool if you understand how it works.

P.s. To the guy up there that thinks that it is easier to sell a house the normal way - Reality Check, wake up and read the paper sometime. There are a record number of people foreclosing on homes right now. I am sure if they could have sold their homes, they would have. On one block I owned an investment property, there were a couple brand new homes that hadn't sold in over a year! I sold my house as a lease option in less than 2 weeks. Like I said, this is a powerful tool if you understand it.

Answer 3

Whenever you are going to invest in something, you have ask lots of question and lots of investigating is needed.
1. Is the property listed at fair market value?
2. Does the property need major repairs, such as septic, roof, mold issues, bats, a good foundation, etc. When you buy, buy wisely.
3. What kind of interest are you going to be paying on the property? (I would recommend having a lawyer look over the lease/purchase agreement, to make sure there are not any loopholes that could hurt you. Most cities offer free legal aide)
4. Is this a city you want to live in long-term? Location is key! Is it in a nice neighborhood? What are the property taxes there like? How far is the fire station from your new home? Is there a fire hydrant near by? Is the neighborhood quiet? Etc etc
It's not a bad idea, you just want to make your decision carefully, cause if you don't it could bite you in the hiney in the long run. Look before you leap!
Good luck, Jess

Answer 4

its a good idea if you have bad credit and can't get a mortgage or have no money for a down payment or want the benefits of renting, like the landlord paying for repairs and lawn upkeep.
Whatever you do, make sure you have a lease agreement in writing, make sure put down what you expect and what the landlord expects, and read all the fine print.
It could be a great deal or you could end up getting screwed. Becareful, you may even want a lawyer to look at your agreement.

Answer 5

It all depends on your life. When you lease with the option to buy your payments go toward the down payment on the house. And you need to clarify who will be paying the taxes, insurance and other things. Also you would be responsible for fixing things that go bad like plumbing, electric water and the such. If you intend to buy a house down the road it can be a great way to get started. If you don't want the hassles of home ownership I would not recommend it.

Answer 6

Some leases have a provision for early termination. It sounds like you do not. I would consult an attorney on this one. Perhaps you could find someone to take over your lease, or there is an amount your landlord will accept to let you out of the lease..

Answer 7

Only if you have a contract legally binding to both parties. What portion of the lease payment actually goes toward the purchase? I'm very skeptical. If a person is really interested in selling a house, listing and selling it outright is much easier and quicker. I would think he has a hidden agenda.

Answer 8

It could be if you are in a position to buy it if and when he decides to sell it. Is he doing an accululated down payment? If not it would just give you the first option to buy if you live there for an while and like it then you should discuss it.Discuss it further with him, so that you understand it.

Answer 9

Things to keep in mind:

1. How much of the rent will be applied as
a down payment?

2. When will the "option" expire? When it
expires will the option be worthless?(Will
you receive any kind of a refund?)

3. Can the tenant "sell" the option to
another tenant or buyer?

Answer 10

It is a good idea if the house is in good shape. All the money you put into the rent will then go for purchasing the house.