Rent to Own?

Renting to own is a good proposition for some but not most. If you are not having any mortgage problems (facing foreclosure). This may be a good idea for you. Even if you rent your home without the option to buy it is good income and/or you can write off your losses even if they are J. on paper.

A friend of mine tried to sell his home this way. He had tenants who rented the home for the first year. Year two is when he considered putting the house on the market. Year three is when they made an offer to rent to own the property. The term of the rent to own lease with the option to buy was scheduled for one year. It also included terminology about the tenants being able to qualify for a mortgage. The end of this story was interesting to M. because these tenants didn't qualify for a mortgage when the time came for them to buy and actually skipped out on the house. He ended up keeping their deposit which was built into their rental payments per the terms of the agreement. He was able to find another couple to pick up where this couple left off. He J. transferred part of the deposit to this couple and they were able to qualify for a mortgage and he was able to rid himself of the home.

I think you need to learn more about the market you live in such as what rentals are going for versus what houses of your kind are selling for.

Crunch the numbers and see what works. Don't make this call based on your emotions but make an informed decision using several experts in this matter meaning lawyers and licensed real estate professionals.

I would have a contract drawn up with a real estate lawyer. Too much at stake....

As a person on the other end (wanted to rent to own), I can tell you, most of it protects the SELLER, not the buyer (so that's in your favor!) Speak with a real estate attorney who has experience with this to write up the paperwork and spell all the clauses out for you.

Do background/credit/ and previous rental history on your buyers. It will cost you, but well worth it (although on a side note, my credit is TERRIBLE, my landlord [we rent] gave M. the benefit of the doubt, and now we're his best tenants EVER, his words, not mine... so use your gut instinct too).

M. personally, though this wouldn't be in my favor, make them bring their own appliances. That's my biggest safety net with renting, that if the fridge or oven or dishwasher or laundry machine breaks, my landlord is responsible for replacing/fixing it. If I were you, make your renters bring their own big appliances.

They should be responsible for maintaining the property as well. I WOULD let them paint, but if they break contract, THEY are responsible for painting it back. You will fix things like if a tree falls on the house, AFTER they've paid their renters insurance deductible... stuff like that. Have the house inspected first (you may have already done this). Make sure they put a hefty amount down first. An attorney will really be able to guide you much better.

Lots of people are doing this now; I J. hope I'm lucky enough to find my dream house rent to own, LOL! Good luck :)

My family and I rented our home for 11 months. Our lovely landlady, whom we loved, made it known from the start that the house was on the market and she'd like to sell it. She offered to let us apply all the rent we'd paid toward the purchase price if we chose to buy it. Houses tend to stay on the market for a long time in our area. We love our house, but we didn't want to buy until we knew that my job was going to work out and that we'd like the area. After nearly a year, we were ready to buy. I hired an appraiser, and offered to meet our landlady at the appraised price, minus the rent paid. (She had been asking considerably more than the appraised price.) She agreed, and I hired a real estate lawyer to do the paperwork. It really worked out well for both us and our landlady, whom we still love :)

I think the reasons it worked out so well included the fact that my husband and I are both securely employed, and we have a child; these things make us a pretty stable quantity, less of a risk for a landowner. We did get a dog while we were renting, which was something our landlady only reluctantly allowed us to do. Her reluctance was understandable, but my advice is, if you get a nice family and you want to sell the house, don't let a pet be a deal-breaker!

Don't make your renters responsible for issues in the home. One of the big reasons people rent is to avoid having to deal with issues in the home. I would have been extremely skeptical if our landlady tried to put something like that in the rental contract- makes you wonder what the homeowner expects to go wrong. I think the rental contract for a rent-to-own situation should be no different from a regular rental. That also means, it should include basic appliances (refrigerator and oven). We wouldn't have rented our home if those weren't in the house.

Finally, in terms of obtaining renter/buyers, I don't think that should be too difficult. In this economy lots of people are looking to rent. J. be picky- find a good, stable family with good jobs. Make sure your house is in good condition and is a good investment. Kimberly F had some really good points, including trying to make sure your renters are going to be able to qualify for a mortgage. Consider marketing to people who have a similar lifestyle to yours, when you bought the house.

Good luck! :)

We did this and the man we bought from owned over 50 houses he bought and did this with. We paid him a down payment. We signed mortgage papars. He filed them, the house was in our name with the lien against it. He acted as our banker. We had to carry the insurance, if something happened to the house it was our house and J. as if it was a bank, the insurance money would be in both names and he would get paid his balance first. Then if there was a bill left over we had to pay it, J. like a bank.

Our house payment was $375 per month for 30 years...period. That included the interest and any other fees applicable. If we sold the house then there was a formula for how much equity we had and how much the balance would be.

If a person figures out how much they are actually paying for a house over the period of time they pay they would never buy one on payments again. Only a tiny portion of the payment goes to equity until many many years down the road. If you do this make sure you out something in there about extra money being paid and if that is acceptable. It can make you have a lot of extra work doing math and figuring out what to do with it.

Dr. Dobson (?) said on money matters that if a couple paid an extra payment during each month, even $50 extra, they could save thousands and thousands of dollars. Seems like they paid it off in about half the time tool.

We ended up having to let it go, my hubby got laid off work and we lost everything. Both cars, all credit cards, savings, life insurance, etc...our 2 car payments were over $700 per month, the full coverage can insurance was $1100 every 6 months, credit card debt was under $10,000 easily. So we let the house go too. It was hard and we thought about trying to sell it so we could make a little money but decided to J. let him resume ownership. He was happy to do that of course because he made all that money and didn't lose the house. It is being lived in by the people that bought it from him the next time. They pay more per month but that is because the market changed.

Are you asking fair market value?