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  • Rent to Own Homes

    My wife was had heard about Rent-To-Own Homes, and found a few websites listing homes in our area. Are these Legit? i notice they're mostly forclosures. How does it work and such. Good idea, Safe?

  • #2
    I heard that if you miss a payment or are even late it is written into the contract that you lose the house and all you have paid into it. Then they get to start all over with rent to own on another person. Potentially "selling " the house severaly times. Also looked into it years ago and the prices are simialar to renta center furniture. (in that it is waaaaay overpriced)

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    • #3
      We rented a home in a new location and learned the owner had just taken it off the market as the listing expired. Long story short, we bought the house having our real estate lawyer draw up the agreement and it worked out well for both parties.

      In this circumstance, you must read and understand every single word in the agreement. You must go to the lender and where ever documents are registered to verify ownership. You can negotiate details if the owner is willing but everything must be signed, notorized and verified. Banks don't like holding real estate they aren't making profit. I've read stories about sellers in trouble signing over their houses when they don't have the right to do so which can cause you trouble.

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      • #4
        Are they legit? Yes. Are they the way to go? Generally not. Better to rent with a right of first refusal clause in your lease agreement. That way, you get first shot at buying the place if the owner decides to sell but you aren't locked into buying it if you change your mind for any reason.
        Steve

        * Despite the high cost of living, it remains very popular.
        * Why should I pay for my daughter's education when she already knows everything?
        * There are no shortcuts to anywhere worth going.

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        • #5
          Generally, there are upsides and downsides.

          Often, a portion of the monthly rent is credited towards your down payment. So if the agreed selling price is OK with you, but you don't have a down payment together yet, this could be a good way to go. You lock in the price and you have a definite plan to build your down payment.

          If, at the end of the agreement, you decide the price of the house is unattractive, or you've changed your mind, you can walk away, but you may forfeit the monies credited towards a down payment. It can be good for the seller because he's made a sale, but there is risk to him if you don't close and the value has gone down, or the house requires renovation because the seller caused damages.

          Like all agreements, there could be details that make it unattractive. But it could work out for you. At the end of the lease, you could be no better or worse of than if you had just leased the house. Depends on the lease payment, amount of the credit, and of course the purchase price. Also, you run the risk of your credit changing and not being able to get financing or a good interest rate at the end of the agreement.

          Looked at another way, it's like trying before you buy. You get to try out the neighborhood and the house before you are fully committed. But there are definately risks to consider.

          Good luck!

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          • #6
            Making A Budget, How To Create, Make Budgeting Personal Finances A Priority

            I've landlorded for several years and will tell you to read the lease/rental agreement fully and patiently before you sign. You can ask for a copy; don't be pressured into signing anything. Some landlords are not too ethical and are in it for the option $$ on rent to owns.

            Also, please make sure you understand all the monthly costs; including utilities. Many people overshoot what their budget can handle.

            Tim
            Making A Budget, How To Create, Make Budgeting Personal Finances A Priority

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            • #7
              Rent to Own

              I've just learned that people desperate to sell have been taking an enormous hit selling to 'Rent-to-Own companies. This is significantly different than making a personal arrangement with a bank, financial institution or a private seller willing to carry the mortgage. These companies are using the Rent-to-Own furniture outlet model which are heavily weighted with fees and costs against the buyer. Some houses are those rejected by house inspectors due to significant problems uncovered on inspection.

              This is nearly as unsavory as PayDay Loans. The buyer will overpay and with they way amortorization tables work, this amounts to really gia-normous sums.

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              • #8
                Originally posted by Payn_it>>> View Post
                My wife was had heard about Rent-To-Own Homes, and found a few websites listing homes in our area. Are these Legit? i notice they're mostly forclosures. How does it work and such. Good idea, Safe?

                You want to rent your own house definitly internet will help you for this,but make sure about frauds .you should take advice from property dealer for this which is neer to your home.

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                • #9
                  I think it would be great if you would check it out together for better security, not just for yourself but also for your own future awareness

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                  • #10
                    Rent to own websites that offer foreclosed homes to choose from are outdated and no longer a viable option for someone looking for a home. When the market was hot investors would purchase the foreclosed home and offer it as a lease option to the buyers until they qualified for a loan. With the market unstable and declining, most investors are unwilling to purchase a home strictly to offer the home as a rent to own. The best way would be to negotiate directly with a homeowner to allow you to rent to own their home.

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                    • #11
                      You can't make a blanket statements like "it's great" or "it's bad". Lease Options or Rent to Own can potentially win-win deals for the buyer and the seller. Many honest real estate investors do these deals all the time. Are there dishonest people in this field just as there are in pretty much every industry. The best way to protect yourself from the dishonest folks is to read the contracts carefully. Honest people are willing to discuss and some are even willing to negotiate any part of the contract you have a problem with. Honest people want the transaction to be a win-win. Those are the folks you want to deal with.

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                      • #12
                        Personally I wouldnt do it. Usually the price per month is higher then actually renting. And if the landlord bk's or forecloses on home you are SOL.

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                        • #13
                          Around here they are a bad idea in general. They are set up to favour the owner - not you. If you decide not to buy, you don't get any of that money back. You've basically just spent a lot more than you would have had to for rent (it always costs more than a straight rental - at least that's how it works here), and you have nothing to show for it. I wouldn't enter into this kind of arrangement.

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                          • #14
                            Rent to own home

                            "Rent to Own" is a fantastic alternative financing option for many specific scenarios. It must be followed as a convention loan. As far as the contracts being "stacked in favor of the seller". It is not a true statement. The tenant/buyer has a say of what goes into the contract and what is acceptable before the agreement is written. The tenant/buyer can have his/her lawyer review and rewrite an agreed upon contract. Preparing a contract with the seller/landlord can ensure that the "Rent To Own" investment is fair and balanced.

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                            • #15
                              Originally posted by Payn_it>>> View Post
                              My wife was had heard about Rent-To-Own Homes, and found a few websites listing homes in our area. Are these Legit? i notice they're mostly forclosures. How does it work and such. Good idea, Safe?
                              They are legit and safe, but they almost never make financial sense for the buyer.

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