lease to own homes (real estate, 2010, foreclosure)

[gibbsnm]

I apologize if this topic has already been addressed. I did a search but didn't find any info. Does anyone have any experience or know much about rent to own housing situations? I am planning to buy in 2010 (giving myself time to save up a decent downpayment). I have been considering finding a lease to own home where I can live there for the two years until I'm able to buy. I know that there are certain stipulations as far as taking care of certain maintenance issues myself. I was wondering if anybody has actually bought a home this way themselves and if so, could you please share your experience? Thanks in advance!

[ccognetta]

On realtor.com, under rentals, I have seen in the notes of the listings rent to own options. Not alot but some.

[saturnfan]

Watch out, many scams.

If owner loses home to foreclosure, you have no right to buy and your payments become past rent. You need an attorney if you want to do this.

Why not rent modestly and save up a down payment?

[MikeJaquish]

Originally Posted by gibbsnm

I apologize if this topic has already been addressed. I did a search but didn't find any info. Does anyone have any experience or know much about rent to own housing situations? I am planning to buy in 2010 (giving myself time to save up a decent downpayment). I have been considering finding a lease to own home where I can live there for the two years until I'm able to buy. I know that there are certain stipulations as far as taking care of certain maintenance issues myself. I was wondering if anybody has actually bought a home this way themselves and if so, could you please share your experience? Thanks in advance!

It can be done in as many different ways as you can imagine.

Lease to own, lease/purchase, rent-to-own, etc., have no real definition, since every point in every deal is negotiable.

There are legitimate lease to own sellers out there, but there are a great many grifters who only want a tenant with a non-refundable deposit and a sense of ownership who will care for the property. Often an overpriced property that will not appraise for the agreed price.

I would not suggest offering a non-refundable deposit on a property, agreeing to close in a few years, unless the property was absolutely exceptional.

I would not recommend you ever consider a lease to own without the guidance of an attorney who would review the contract and tell you what your exposure is. Hiring a real estate agent is not good enough.

I would think if your credit was decent in terms of paying bills on time, etc, that a NCHFA bond loan, a community loan, FHA, or other 100% funding would be more beneficial than LTO.
Just my opinion.

[VirginiaMommy]

I agree with Mike! When we were looking for homes, we found one that had this lease to own situation. It was not made clear by the seller's realtor that this is what the seller wanted to do. They put the house on the market as if they would entertain offers for people to buy right now.

Once we started really getting interested in the property, all of a sudden it was a lease to own deal. We knew the house was overpriced, so we never intended paying full price anyway. We quickly decided we were not interested when the lease to own thing came out. If we had wanted to rent, we would have done so from the beginning. I think that the whole overpricing thing is definitely an issue.

The last time we went by the house it had a "for rent" sign...(which it never had before). I think the owner always intended to rent it out though...so I don't know why they were being so shady about it. I definitely would not enter into one of these agreements if I were you...I would much rather rent for a little while and look for a place than have "contractual" agreements which may end up going haywire in the end.

[JJingle]

VirginiaMommy - Most likely the sellers needed to obtain the higher listing price. So, when no one bought at the inflated, over market price, they decided to rent the property. Perhaps the seller took a stab in the dark that you would bite at a rent to own opportunity. Hence placing you on your way to homeownership and giving him the higher selling price.


gibbsnm -

My point is that IMOP, lease-to-own is not as economical as purchasing straight-out. Of course, there are always exceptions to every rule. In general, buyers look towards more creative methods when qualifying under traditional mortgage underwriting isn't possible or is at an interest rate premium.

I agree with the earlier responder - rent at a modest rate and save for the down payment. Why risk paying too much, losing the property in the midst of the lease, or any other issue that may arise.

[gibbsnm]

Thanks to all who responded. I appreciate the info.