Lease to Own (Sarasota, Port Charlotte: short sales, real estate, renters)

[culturedmom]

Anyone familiar with lease to own? Our landlord just informed us that he will be selling the house we are currently in. It came as a complete surprise to us and him (family issues) and though he is really great and we have no fears of having to hurry out or anything, one thing that was presented to us was a possible lease to own on this house. We have moved around a lot and though we are set on staying in Sarasota we had not thought or prepared ourselves to buy just yet, but it is a possibility.

Thanks in advance for your help. I have never really heard fo this option so any info would be great.

[bbronston]

I don't know what your landlord is proposing but there might be a few possibilities here. First, you might be able to get owner financing from him and buy it outright. You can also have part of your rent go toward a downpayment each month, or you can pay him for an option that allows you to purchase the property at a set price at a set time in the future. It sounds, though, like he wants to have it out of his name quickly so the last two probably won't work. No matter what you do, even though you think you know him and the house, you want to have a properly written contract thru an attorney or an agent, and you want to have the property inspected professionally.

[Big House]

Originally Posted by bbronston

I don't know what your landlord is proposing but there might be a few possibilities here. First, you might be able to get owner financing from him and buy it outright. You can also have part of your rent go toward a downpayment each month, or you can pay him for an option that allows you to purchase the property at a set price at a set time in the future. It sounds, though, like he wants to have it out of his name quickly so the last two probably won't work. No matter what you do, even though you think you know him and the house, you want to have a properly written contract thru an attorney or an agent, and you want to have the property inspected professionally.

Good Points - what are some of the options.
1. Does the house currently have equity, where you can make a deal to complete the payments to him, and capitalize on the equity situation with the current lender, so you don't need 20% down?
1.a. Is he upside down on the mortgage? Is the property worth less than he owes?
2. Do you go arrange for a standard mortgage with the bank, and/or another bank?
3. Does he carry the whole mortgage, and will rent / lease funds apply? Does he get a (large / small) cash down payment? Can you make your checks out jointly to him and the bank (mortgage holder) so he can't run off with the payments? Small additional amounts can go to him separately in a side deal, possibly.
4. Is he financing it, or do you need a loan - as b mentioned?
5. Review what the accessed value is, and the sellable market value is, so you aren't over paying.
6. If he has family issues - who else is on the mortgage?
7. Consider how liens could be placed on the house should he not pay, or has other non-payment issues, or others (family) could make claims.

Get a lawyer and / or an agent to help you with all the terms - don't attempt this on your own. I would recommend that you speak to Richard Rosenbaum, in Port Charlotte - he is a very knowledgable title attorney.

[Randy Forbes]

I "leased to own" two (2) properties in Louisiana. It's a great arrangement, but hard to get an owner to agree to offering it. In your case, I'd say that you have more than half of the battle won!

In a nutshell, you agree to a price, determine the duration of the lease period, and determine the monthly payments.

As the tenant, you continue paying "rent" and upon the final payment, the deed is transfered into your name(s).

As the properites I bought were $6,000.00 and $12,000.00, the lease periods were only three (3) and then five (5) years. The time passes pretty fast.

[Sunshine Rules]

In a lease option to purchase, you and the owner of the home write up a sales contract with a lease purchase addendum. The contract spells out what sales price you will pay if you decide to exercise the option to purchase the property within the stated time period in the agreement. Most least option agreements I've dealt with state the buyer has to exercise the option to purchase within either 1 or 2 years from date it's signed.

The lease option addendum will cover how much of what you will pay each month under the lease/option terms will go towards rent and how much money will go towards your down payment should you exercise your right to purchase. In most contracts, if you decide not to purchase, the owner keeps the monthly option money and the down payment you give up front when you sign the contract.

You also complete a regular lease agreement to cover the terms of your lease up until the time that you exercise your option to purchase.

If you decide not to exercise your option to purchase by the deadline spelled out in the contract, the contract to purchase expires.

A real estate attorney can give you more detailed advice and do the required paperwork for you. I would not recommend you attempt this on your own with one of those "kits" from an office supply store. You save a few bucks that could cost you thousands.

Big House makes some good points about researching the owner's financial status regarding the home you're living in.

Here's a linke to a Q & A on lease option purchases you may find of help:
How to Buy a House Using a Lease Option - wikiHow

[culturedmom]

Thank you all so much. It ended up working out in our favor today anyway. after the realtor came by, our landlord realized that what he has to sell the house for to recoup his money and what it will sell for are two very different things. He didn't (and neither did I) realize the large amount of short sales in this neighborhood and how they ahve brought the selling price down so much. So he realized it was not in his best interest to sell right now. That means we have another year at the very least and in that time we can start saving to buy on our own.

Thanks again. You all are great!

[beachymom]

Originally Posted by culturedmom

Thank you all so much. It ended up working out in our favor today anyway. after the realtor came by, our landlord realized that what he has to sell the house for to recoup his money and what it will sell for are two very different things. He didn't (and neither did I) realize the large amount of short sales in this neighborhood and how they ahve brought the selling price down so much. So he realized it was not in his best interest to sell right now. That means we have another year at the very least and in that time we can start saving to buy on our own.

Thanks again. You all are great!

That's good news! You can stay settled for at least another year...and I LOVE your backyard! We just signed on for another year here. Our landlord didn't even attempt to raise the rent. Yay!

[culturedmom]

Originally Posted by beachymom

That's good news! You can stay settled for at least another year...and I LOVE your backyard! We just signed on for another year here. Our landlord didn't even attempt to raise the rent. Yay!

I know, I would have had to go looking for boxes again, lol. Glad your rent stayed the same. It seems to be a renters market now and I have a few friends whose landlords have raised the rent on them.

By the way, I still can;t stop chuckling over our lunch conversation today.We should have a Girl Scout mom's night out or something. Y'all are a hoot.

[beachymom]

Originally Posted by culturedmom

I know, I would have had to go looking for boxes again, lol. Glad your rent stayed the same. It seems to be a renters market now and I have a few friends whose landlords have raised the rent on them.

By the way, I still can;t stop chuckling over our lunch conversation today.We should have a Girl Scout mom's night out or something. Y'all are a hoot.

Oh my goodness! Me, too!! What a fun time! And a mom's night out sounds great...just what I need!