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Old 10-10-2007, 11:16 AM
 
18 posts, read 98,207 times
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Default How does a "Rent to Own" work?

How does selling a property as a "Rent to Own" work? I've tried researching online but haven't much info. Please advise. Thanks1
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Old 10-10-2007, 11:48 AM
 
Location: Richmond, VA
2,240 posts, read 6,634,344 times
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I think it depends on how you do it. I spoke with an agency that does it for you and this is what happens:
the agency finds a potential renter/buyer. They show your home and if it is a good fit they start renting your home. After 12 months to 18 months they then put in an offer on your home. The reason it is done this way is b/c this agency works with people who can not get a loan at this time, so they are hoping that after showing they can make the rent payment (equal or more than what the mortgage would be) the bank will see they can make a mortgage payment after 12-18 months and will have more faith in them to give them a loan. THis is what I was told...
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Old 10-10-2007, 05:32 PM
 
Location: Bothell, Washington
2 posts, read 53,775 times
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It varies. I work with a real estate investment company that offers properties with no huge non-refundable downpayment. The current market price of the home is appreciated 6% and the rentor signs both lease agreement and purchase agreement. We only require a security deposit equal to the rent which is comparable to the current rental market and a non-refundable option payment is paid above that (usually 300+$). The term is offered for 12 - 24 months. The sec dep, pets deposits and all option payments are then credited to the buyers when they exercise their option to purchase. If they don't do that then those items become non-refundable. Many more Lease/Option properties are showing up in the Washington State area. Most require a non-refundable fee of $5000 or higher to enter into the option agreement.
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Old 10-19-2007, 11:00 PM
 
Location: Somerset, NJ
505 posts, read 1,483,213 times
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I've also heard of options where say 10% of your rent payment goes towards the purchase price. You generally agree on a price at the time of the lease much like a stock option is, the buyer is hoping the market goes up, the seller is hoping it goes down.

Make sense?
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Old 10-19-2007, 11:23 PM
 
Location: Lexington, KY
6 posts, read 59,361 times
Reputation: 14
Default Rent to own...

It often works like this... an unscrupulous landlord offers a motivated party to enter into a contract to buy the property he rents to that motivated party. The contract is too often written by lawyers or agents hired by the landlord to make the contract decidedly in his favor. Often a non-refundable deposit is given and an end date is established and the renter must find a mortgage by that date or lose the deposit and possibly face eviction of sorts. The landlord also sets the price at which the property will be sold and it's often much too high. There are lots of ways to buy a home these days and it is a very viable option to go a "Lease Option" route, but I highly recommend a real estate agent who is familiar with these deals be consulted. Agents in KY are paid by the sellers side so there is no money due from the buyer for the valuable advice given... but it is essential that you find someone who understands these contracts and is dedicated to serving your best interests. Iam an agent who works on such contracts, and I know of others I would give reference to depending on what area your interest lies. Moderator cut: no advertisingGood Luck! Bob
Quote:
Originally Posted by countrypooh4 View Post
How does selling a property as a "Rent to Own" work? I've tried researching online but haven't much info. Please advise. Thanks1

Last edited by Sam I Am; 10-20-2007 at 04:51 AM..
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Old 10-25-2007, 09:00 PM
 
6 posts, read 56,878 times
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Default Rent To Own

Just like any real estate transaction can be set up WIN-Lose or WIN-WIN.

Generally the landlord gets a higher rental, and the tenant takes better care of the property. The tenant should make sure price and terms are fair.

Search rent to own and your town or county name and you may find some. It will probably be used more as the market continues to be weak.
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Old 10-26-2007, 09:15 AM
 
Location: South Metro Denver and looking at houses
8,386 posts, read 17,848,910 times
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There is a purchase agreement and a lease. Seperate documents. Price and lots of terms to be negotiatited. Inspection, appraisal, time frame, security deposit, option fee (if lease option) or earnest money (if lease purchase,) rent credit (if any) what happens if no closing on closing date? What happens if something needs to be reparied/replaced during the lease....
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Old 10-26-2007, 04:31 PM
Status: "unknown" (set 2 days ago)
 
4,503 posts, read 5,866,810 times
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I think I would benefit from one of these -- at least conceptually.

In an area where I may rent, it would be a business location for me, more than a home.

I do various projects around the country and have thought it may be nice to rent a house, rather than pay motel/hotel bills. The projects I do can easily afford either, as I budget at least $100/day or about $3000 a month, so it looks like I could rent a pretty nice house for that, and I do not tend to mind as the rent is a complete business expense for me -- all pre-tax.

What I am thinking is if I were to sign-on to lease/purchase with a "high" lease price for a year or two, followed by a low sales price, it could be a good deal for both ends.

Such an arrangement seems like it could be a good deal, tax-wise for both me as a buyer and the seller. The seller would be getting a bunch of their money early on, and is allowed depreciation during the rental period, and little or no capital gaiins at the end because the purchase price is low.

Assuming there is good faith on both the buyer and seller. what am I missing to look out for or re-consider?
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Old 04-26-2009, 02:14 PM
 
Location: A little suburb of Houston
3,701 posts, read 10,634,526 times
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The legal term for Rent-to-Own is Land Contract. Do as search using those terms and you might be more successful.
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Old 04-27-2009, 11:10 AM
 
Location: NorthTexas
634 posts, read 860,997 times
Reputation: 313
In Texas it is almost never a good idea to do this. If you want to buy a property and you cannot get financing on your own you may want to look into seller financing.

A lease to own agreement has very little benefit to you. If the owner does not pay the mortgage you will have to get financing or move, so why would you do this?
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