[robojester]

Ok guys, what's the up and down side to these programs?

[EA]

Like furniture? There is no upside.

The major downside is paying triple retail. The minor downside is them hounding you to make payments every week.

When I was 18 I was going to rent one of the large stereos to own. I paid the first week. The next day they called me to remind me when my payment was due. The following day, they called me again to remind me when my payment was due. They did this every single day even when I asked them to stop. I ended up giving it back.

[PinkString]

From the little I know about rent to own homes, you have to rent for a year or two first, maintain good credit, and I think they take 10% of what you have paid in rent for the last year or two as a down payment. I could be wrong, but that is how it was explained to me by someone that bought a home that way a few years back.
I remember them telling me that they were not too happy with the process, that it seemed to cost more than a conventional loan.

[WVREDLEG]

Don't do it.

Lease a place for 2 years. Pay $1000/month rent. Save $500/month. Get your FICO in the 700s. At the end you have $12,000 toward a purchase and closing costs toward ANYPLACE you can qualify to own.

Lease-to-own a place for 2 years. Pay an option fee, say $2k to be held by LL. Pay $1000/month rent. Pay additional $300/month to be held in escrow by the LL. At the end you have $9200 toward the purchase and closing costs of THAT house alone. Change your mind? Miss a payment? Late? Read that contract carefully.

Think about it. A person who doesn't meet lending standards in credit, debt-to-income, employment history, income, or adverse judgments is high risk, which is why the lender will not underwrite them. If you qualify for a mortgage, DO NOT LEASE TO OWN.

Lease-to-own caters to the fuzzy gap between fully qualified to buy and someone with enough dings on their financials that cannot be mitigated by the lender. As a LL who wants to sell, I want a fully-qualified buyer with cash. Second to that would be a conventional loan with underwritten pre-approval--other than a rare circumstance, like a tax situation, a LL using lease-to-own is not doing it for your advantage.

For the lease-to-own terms to work for a LL, the tenant has to put skin in the game, or more like a "pound of flesh". You have shaky financials...what assurances do I have that you will fulfill the contract? So I make the terms tough and failure expensive for you. If you bail out, the LL collects penalties (depending on the circumstances), gets to keep the house, and you leave. One week later, the LL signs up another hopeful lease-to-own tenant knowing few ever fulfill their end of the agreement.

The same reasons a lender says NO to someone is how a lease-to-own LL profits--most NOs are never going to follow through on a 2-3 year contract requiring level payments monthly--if they could, they would not need a LL to hold their savings for them. Set a goal and save on your own...do not rely on a LL to take care of your down payment and hold your money (I am a LL).

[Camaro5]

Are you talking about houses or appliances and TV's?

True story -- when I lived in LA in the 80's my house got burglarized a few times. I rented one of those big console TV's (that they still had back then) figuring it was too big to steal. After a few months I called them to come and pick it up since I didn't need it anymore. They came and got it but didn't give me a receipt. A month or so later after I'd moved back to the Chicago area the company called and wanted their TV back. Said they never had picked it up. They kept bothering me. I called BS on their scam and said not to call me again. They never did.

Rent to own? NO!