#rent with option to buy
Answers ( 7 )
Owners who will consider rent to own/lease purchase are an extraordinarily small percentage – definitely well less than 1% and probably closer to 1 in 1000. Why is this? Because when an owner wishes to sell they need to move on in their life and get out from the mortgage obligation so they can take the next step. A person who is desperate related to their mortgage payment can’t afford to consider rent to own in most cases.
Rent to own also tends to be a great way for the potential buyer to lose a lot of money.
While the theoretical concept of rent with the option to buy may seem attractive, some of the realities are considerably less so.
Owners who will consider rent to own are very rare, so it will cut down your options for properties considerably. I consider it much smarter to spend a year or two working on improving your credit and (if necessary) saving up a good down payment. Yes, it is tough to move a couple of times but it even tougher to lose a lot of money attempting to buy.
Some features of rent to own:
1. Down payment required – often substantial (say 10% or even 20%) and is non-refundable if the potential buyer doesn’t purchase.
3. If not qualified for financing at the agreed upon time and price, then you lose everything you’ve paid to date.
4. The price is agreed upon at the beginning of the contract, and who knows where house prices are going.
5. You still depend on the owner to pay their mortgage. If they fail, you lose.
If you do get involved in this, please involve an attorney in the contract.
- March 09 2013