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"Rent to own" or "lease purchase" (a formal agreement, drafted by an attorney, and recorded in the property records to protect the owner) is probably the best route for you. Though I wonder if YOU can actually afford the potentially big ticket, major repairs. If your credit is not good and you don't really have significant, liquid funds for a downpayment, how would you truly be able to handle such major repairs like roof, furnace/HVAC, etc. that are thousands of dollars and require professional service?
Well if I offered say $1500/mo or 18k/yr then she would technically be earning more than she would renting because she would not have the expenses (taxes, repairs, maintenance, realtor fees etc). She would also be free of all of the stress that comes with leasing houses.
I know these guys seem a bit douchey but your post smells fishy
Well if I offered say $1500/mo or 18k/yr then she would technically be earning more than she would renting because she would not have the expenses (taxes, repairs, maintenance, realtor fees etc). She would also be free of all of the stress that comes with leasing houses.
I know these guys seem a bit douchey but your post smells fishy
You have no idea what her overhead costs are. It could be running at $300 a month and clearing $1500 and you're offering her 1k. Which now is taxed (possibly at a different rate than investment income) and she has no deductions now
Problem OP is that you do not understand either rent to own, or owner financing. The following is a simplified explanation of what you are asking about. The reason you got flack, about your ideas, was you are not really offering to buy the property with owner financing or rent to own by normal industry standards. What you proposed, was looking like you want to get the property in your name, and leave an elderly lady high and dry. This is considered a scam, and can get you in prison.
Let me clear up for you, what you should consider, as it is done every day and is legal and approved way of handling things.
Rent to own, is a practical thing to do if it is properly structured. I say this as a retired real estate broker, who was in the business from 1972 till I retired. But it is set up different than you are thinking as I will explain below.
First a rent to own purchase agreement, is set up starting with the present rent, and then adding say $400 a month as a payment that is applied to the purchase price at closing at the end of the rental period say 5 years. So to make it work, you would need to pay as an example $2,100 per month for 5 years, with $400 per month to be applied against the purchase price, and could go towards the down payment for normal financing in the future. If you do not close the sale at the end of the 5 years, that $400 extra per month remains the property of the present owner. That is how a true rent to own contract is written. The final purchase price may be the current one or more likely a higher price to allow for 5 years of inflation. One good thing about this for the buyer, is they lock in their rent at the current rent if the owner accepts this offer.
Owner financing. With owner financing, there is mortgage or deed of trust so that the property remains in the owners name, till it is paid off, and is not put in your name immediately as you propose. The mortgage or deed of trust is filed at the county courthouse, to protect the buyers interest. When the property is paid off in full, you get the deed.
Either one of these plans is legal and aboveboard. You would not have gotten some of the posts you got, if this is what you were proposing. What you were proposing, is considered a possible scam, and places the property, the owner, and you in danger.
If she is "elderly," as I understand that word, it's unlikely she will still be alive when you are finally finished paying for the house decades from now. So when she dies, you would owe the payments to whomever she listed as her inheritor in her will. So wouldn't they have more to lose than she does? As it stands now, your rent is probably her major source of monthly income. So it doesn't matter to her if the house is a pile of sticks by the time she passes on, it only matters to her heirs, who might have the same ideas about fixing up the house that you do.
Have you given any thought to pursuing a first time buyer's mortgage package? If you haven't owned a home, you might be eligible for that program. My daughter bought a home with 1000 down, 3.4% thirty years. When and if she sells the home, she will have to pay $10000 to close the mortgage. She bought it two years ago and it has been appraised at $5000 more than she paid/financed already. Realtor is close to a wizard and found her the cheapest house in a great neighborhood.
Last edited by indytoflgirl; 12-23-2015 at 03:59 AM..
Reason: spelling
Does she have any children/heirs? If not consulted, they might try to sue you if they got unhappy, for taking advantage of an elderly person.
This is some great advice. If I learned someone had taken advantage of my elderly parents as described they would in fact find themselves in court.
The best deals are the one where the selling party benefits. In this case the OP is quite clearly looking to own a house, and pay less then rent. Thats just not going to fly. And OP will end up in court, and most likely losing if OP attempts it.
Try to set up a 3 yr lease purchase agreement. Agree to pay the owner monthly payments as though you were paying the bank. Rough out the paymets by dividing the homes current market value by 360. It'll be lower than rent but her upside is that she's no longer the land lord. Since you're leasing with the intent of buying, you're now responsible for the upkeep and maintenance as if it was your own home. After all, you hope it one day will be. If you fail to make your monthly payment in a timely manner, you're out and she keeps your money paid to that point as well as, of course, her home. If you pay on time and successfully reach the end of the lease agreement, you have a rock solid credit reference that should go a long way toward securing a loan to purchase the property outright.
Of course, research, research, research the ins and outs of this process but a lot of information, docs, sample agreements are out there to use as resources.
I currently rent a house and would like to own it but am unable to get a mortgage, have zero credit and no money to put down. I think I have a solution...
I currently rent a house for $1700/month. My landlord is an elderly lady who owns and lives in a second house near by. The house is old and will need some major repairs over the next 10 years (windows, siding, kitchen). My landlord seems overwhelmed every time something needs repairing. She trusts me as I always pay my rent on time and we get on well.
I would like to propose to her that she gives the deed of the house over to me. In return I would then owe her the value of the house to be paid in monthly installments of $1000/month with the option to pay back sooner if I wish. The house would then be mine and off her hands and she will receive a steady monthly payment without any risk of unexpected expenses. I could then do as I wish with the house and the debt owed to her would be completely unrelated. Unfortunately as she is very old, she will not likely see all of the loan repaid in her lifetime but should she pass, the loan could then transfer to her children so it's an inheritance that she can also see some benefits from.
I have a lawyer in the family and am really considering drafting a proposition and contract and seeing what she thinks. This would save my wife and I $700 per month and give us some growing equity to our name that we can live in for the foreseeable future and potentially rent out ourselves should we move one day.
There are many pros I can list for both her and myself but I was wondering if this sounds like a good/feasible idea.
Any help, suggestions or feedback would be greatly appreciated. This is a new idea and I want to get some other opinions before I take it any further but at the moment I can't see a reason not to try it and see what my landlord thinks.
Thanks!
Tom
That's very illogical. Why would someone sign a deed to you and they get $700 less than renting it?
Ask if she will sell, find a lender or a cosigner and do it the right way.
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