Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I will preface this by saying, yes we would get an attorney to review everything.
Bottom line is a company that works with homes about to go into foreclosures has a home that I am interested in. It is a rent to own situation that works for us as a family for a number of financial and regional reasons.
When I spoke to the company that is renting the unit, this is what they told me. Bare with me as this is a bit new to me.
1 They scoop up property before it goes to foreclosure. Owner walks away.
2 The loan on the property is in the name of the owner and once a rent to own is in place, they take take care of the loan and transfer it to them by getting their own loan, investor, etc.
3 The company in question is in possession of the title.
4 An agreed upon selling price would be set prior to signing anything. A portion of the rent would go toward the home.
5 We have 5 years to rent it or buy the property
Of course I would get this inspected, appraised, etc etc. I am not new to buying homes, but I am new to this kind of situation. My concern is the obvious one that this was a pre foreclosure & the lein on the property. This was a force HOA foreclosure, but I could be wrong.
How do I know that the process of this company paying off the debt and knowing that my down payment and rent portions going toward the purchase price will be applied? Just how secure is my money?
Additionally, this house needs cosmetic work and a kitchen. It was undergoing a cosmetic renovation and the kitchen was torn out, prepped, and then the owner had to walk away. The work isnt a concern for us, but I dont want to get burned here. eg, build a kitchen and then we are kicked out for some reason.On the surface it looks like the value of the home is reduced to take into account the need for a kitchen and the cosmetics.
Again, an attorney would get involved to review everything, but I am looking for pros and cons for this kind of situation. This is all in the early stages so I may be missing some details or explained something poorly.
In California, approximately 5% of Lease-Options ever get purchased by the lessee. So the option $$ end up going to the owner, the lessee just spent more to lease the house. And no, you don't get the $$ back if you don't exercise your option to purchase.
Better to rent a stable property and save your money for a down payment. 5 years from now you should be able to save quite a bit.
Pre-foreclosure... hmm... and just what exactly insures that it doesn't get to foreclosure? The whole thing sounds a little fishy to me...
How does said company get the title to the property while the mortgage/lender is still 'unsettled'? i'd think they'd get the title stuff and loan stuff cleared up BEFORE putting a renter in there. What happens if something falls through? The tenant gets the knock on the door.
True, very few lease/purchases ever see completion - you're promising pricing NOW for something down the road - who's to say how things will be then?
Can you not find a 'regular' rental to be in for a year or two until you ARE ready to flat out purchase (without all the shenanigans?)
Pre-foreclosure... hmm... and just what exactly insures that it doesn't get to foreclosure? The whole thing sounds a little fishy to me...
How does said company get the title to the property while the mortgage/lender is still 'unsettled'? i'd think they'd get the title stuff and loan stuff cleared up BEFORE putting a renter in there. What happens if something falls through? The tenant gets the knock on the door.
True, very few lease/purchases ever see completion - you're promising pricing NOW for something down the road - who's to say how things will be then?
Can you not find a 'regular' rental to be in for a year or two until you ARE ready to flat out purchase (without all the shenanigans?)
We are renting now and intended to move out in about a year to buy a home when ready. We can break our existing lease at any time with minimal fees, so we do look here and there. We can across the property and hence my concerns here. Its seems like a good offer... but then again we know the old saying.
You didn't by chance find the house/the company on Craigslist did you?
I see a hundred of these "rent to own" rentals on "pre-foreclosures" listed on my local Craigslist every day. Wouldn't give them a second look or give them my contact info.
If you're really interested in that particular house, I would take the address and use something like foreclosureradar to determine if it really is a preforeclosure with an auction date. You may have to watch for quite a while, but once it sells it will eventually come to market and you can purchase it from the bank. You might be waiting for a year or more, but you said you are renting and can break your existing lease at any time with minimal fees. That's huge; a lot of places where I've lived it's not cheap nor easy to break a lease early.
Keep renting, keep saving, and if you have to have that particular house, keep watching. Who knows, maybe something else you like even better comes up in the meantime. It happens.
Investor owners use the strategy of rent to own to obtain a premium rent in exchange for the option to buy and apply that premium to the down payment. Looks like this company puts together such deals. They do this because the liklihood of the sale proceeding to a closing table is somewhere between slim and none.
There are usually financial reasons why a renter cannot buy right now and despite intentions, often times those reasons do not change, over time.
Having spent time living in the property, renters often discover that they do not want to proceed with the sale for any number of reasons.
The option price is not necessarily the current market price and the down payment reserve is not adequate to cover the difference.
Owner financing is not likely to be competitive.
You will be in a substantially better negotiating position to buy anything when you are positioned to buy outright. Stay put and put that rental premium into your own bank account and get your own financial house in order.
Honestly this sounds like the exact scam on a home my buddy was renting in Florida.
The "investor/company and defaulting homeowner are all in the same game"
They put those crooks in jail for 10 plus years for doing the same scenario you mentioned above.
All they are doing is creating roadblocks and delays in the foreclosure process.
Which state is this home in? I hope it's not in Florida cause there are scams going on all the time in this state especially since its a judicial foreclosure state and will take over 3 years for a contested foreclosure.
Its FL and it should be listed in the link I sent over. They dont even want to show me docs before I get there with the deposit. Whats wrong with seeing a legal doc before you sign it? Just too many red flags. Perhaps a desperate person who wont want to delay a "good deal" will take a chance, but this is just odd.
Its FL and it should be listed in the link I sent over. They dont even want to show me docs before I get there with the deposit. Whats wrong with seeing a legal doc before you sign it? Just too many red flags. Perhaps a desperate person who wont want to delay a "good deal" will take a chance, but this is just odd.
It's a a scam. I won't post a name. But these scam artists from California (including a disbarred lawyer) we're trying to these shady deals especially in "Northeastern Florida"
Like you said the defaulting homeowner "gave the title" to so,e company. Sounds like the exact thing my friends got into.
Florida has sunshine laws. Look at the home address.
Florida has a lot of fraud. It leads the nation in insurance fraud, medical fraud, mortgage fraud. You name it.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
