RentToOwn-HouseFinder.com
Rent Home with Option to Buy?
Is this a thing of the past? Do realtors/ home sellers utilize this option anymore? Do you know any agents that do this in New York? How do you go about renting to own a home?
Public Comments
- You could work a deal with the home owner. Phone the owners who advertise their rentals. It's not always a good idea, though. Make sure you read the fine print. If you don't follow the rules on the lease, you could lose your down payment. You may also have extra costs such as maintenance and repairs that a renter doesn't normally incur. You'd be wise to have a lawyer look over any contract.
- Here are some things to consider if you are thinking about renting to own: Most of the problems from rent to own come from the "seller" cheating the "buyer". Who pays the repairs while you are renting? Does any part of the rent apply to purchase? Does the deposit apply to purchase? Is the purchase price fixed in the beginning or sometime later? If later--how? What happens to your money if you change your mind later? What happens to your money and rights if the owner dies? What happens to your money and rights if the owner allows the property to get foreclosed? What happens to your money and rights if you later cannot qualify for a loan? Well, like many business deals, there's nothing wrong with the concept itself, but there's danger in the "terms and conditions" of the arrangement. 1) How much of your monthly rent applies to "principal"? (And does this mean that you start "owning" part of the house right away? Or will it be considered strictly "rent" until some later date when you've paid in some total amount? If so, what's this amount?) 2) She'll still need to pay taxes, perform maintenance, and home insurance. Who pays for these? And, if she's the owner, she'll likely get any tax break (and you won't get any mortgage interest break on your taxes like most home buyers). 3) What if the home value drops dramatically over the time you're renting? Will she consider dropping the "purchase price" down the road? 4) What if the home value skyrockets? Will you still be paying toward the original agreed upon price, or can she raise the price? 5) What if the owner wants (or needs) to sell the home at a later date - leaving you out in the cold. Do you get some of your money back, since it was supposed to go to the purchase of the home she's selling? 6) What if the owner (God forbid) dies? How will the home be handled? Will this terminate any rent-to-own agreement, leaving you high and dry? As you can see, there's lots of room for disagreements down the road. The best way to handle this is with an attorney and a drawn up contract between the two of you. This is the only way to flush out these kinds of details up-front (thus preventing a feud down the road).
