Home Buying in Tampa>Question Details

hoz215, Home Buyer in Tampa, FL

ANY BODY KNOW ABOUT RENT TO OWN PROPERTY?

Asked by hoz215, Tampa, FL Tue Mar 5, 2013

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9
Call 352-672-3828. He has rent to own properties
0 votes Thank Flag Link Wed Mar 6, 2013
Don's answer mentions that there are "small errors" in my post, however, does not elaborate on this claim. There are going to be differing opinions, however, there was not anything mentioned in my post that is an error.

Fred Strickroot
HomeNet
727-478-8997
0 votes Thank Flag Link Wed Mar 6, 2013
Sure.

Fred's answer is quite good. A few small errors, but definitely read it.

A few tips (some already covered):

--Make sure your Realtor knows, understands, and is comfortable with lease-options or lease-purchases. (There's no such thing as "rent to own." With a lease-option, you rent with the option to purchase. With a lease-purchase, you lease and are committed to buying. Either is OK. What people call "rent to own" usually refers to a lease-option arrangement.

--Have a lawyer--a real estate lawyer--review the paperwork. There are lots of ways you should protect yourself. For instance, you want to be protected in case the owner wants to sell to someone else, not to you. You want to be protected if the owner gets into financial trouble and stops paying his mortgage. You want to be protected if, at the end of the option, the house doesn't appraise for what you've agreed to pay. All of these are serious issues, but there are very effective solutions to each.

--Many lease-options are not listed on the MLS that way. So you have to know how to search for them and how to "make" them. You can do some yourself. For other techniques, you need a Realtor. Here's a link to a blog I wrote on how to find lease-options and lease-purchases: http://bit.ly/FindaLeaseOption.

Hope that helps.
0 votes Thank Flag Link Wed Mar 6, 2013
Hi Don, I will greatly appreciate know what you believe the errors are in my post. Thank you. Fred
Flag Wed Mar 6, 2013
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Since rent to own properties may not be listed as such, consider working with an agent of your own. Keep in mind that rent to own can be risky and one could stand to lose a bit of money, therefore do inform yourself well, and consider consulting with an attorney who specializes in real estate beforehand. If you haven't done so yet, visit with any licensed loan officer, see if you can buy outright...
0 votes Thank Flag Link Wed Mar 6, 2013
Doing a rent to own, or a lease option, can have downfalls for buyers and sellers alike.

Lease options can entail you putting a substantial amount of money down - up front. This money may be non refundable if you don't exercise your option to purchase the property. In addition, normally you would be paying above market value for rent with a portion of this money going toward the purchase price.

My advice is to speak with a loan agent first and try to get pre-approved for a loan. If you cannot get approved, the loan agent should guide you on the right path to get approved.
0 votes Thank Flag Link Wed Mar 6, 2013
Usually on a rent to own home, the homeowner is going to want 10% or more down. They also may require a credit and background check. Each case is different. It will be very important for you to understand the terms of the rent to own agreement, therefore, I encourage you to work with a Realtor that is experienced in the nuances of rent to own agreements. You are afforded more protections if you negotiate an agreement through a Realtor vs. seller direct. Also, make sure that the price you are paying is not higher than fair market value. Many homeowners think they should get a premium for offering a rent to own home, however, you are not going to be able to "own" the home eventually if the home does not appraise and you cannot get a loan to purchase the home. You can pay for an appraisal ($375-$500), or you can have your Realtor do a comparable market analysis (CMA) for you. Do not rely on values given on 3rd party real estate websites. They are NOT accurate.

Here are some additional items to consider in rent to own:

Advantages

1. Eventual home ownership.
2. Opportunity to improve credit rating during rent to own term.
3. Time to save up for a down payment to obtain the loan to purchase the rent to own home.


Disadvantages

1. Many sellers do not want to lock into a specific price due to the possibility of market value fluctuations. The homeowner usually will not mind if you end up paying more for the home than its value, but they will definitely not want you to benefit from an increase in the market value that might be realized. So watch out for anything in the agreement that relates to purchase price. Is it fixed or will it fluctuate?
2. Time goes by much faster than we all realize. The end of the term to exercise the option will arrive faster than you think. Make sure that you are going to be in a financial position to exercise the purchase option when that time arrives. Talk to a mortgage professional to find out what steps you need to get yourself in a position to get qualified for a mortgage.
3. Possible responsibility for the maintenance of the home. Make sure you understand what maintenance obligations are going to be yours.

A rent to own property can be an excellent solution to your housing needs, but please BEWARE of the common pitfalls that you can run into. Make sure you read and understand everything before you sign anything.

Sincerely,

Fred Strickroot
HomeNet
727-478-8997
0 votes Thank Flag Link Wed Mar 6, 2013
Absolutely! Don't be dissuaded by the ill informed. Often superior to the alternatives.
0 votes Thank Flag Link Wed Mar 6, 2013
Finding a rent to own is risky. I have seen sellers weight the transaction toward themselves with more rights than the buyers. Be very careful if you go into this type of transaction. Typically some amount or your monthly rent is credited toward a down payment, or there is some other incentive for you to buy.

I have never heard of it being done successfully.

Frank
http://www.hawaiihome.biz
0 votes Thank Flag Link Tue Mar 5, 2013
Yes, lots of people know about rent to own. It's not for everybody, but it is an option for financially strong buyers.
Web Reference: http://www.archershomes.com
0 votes Thank Flag Link Tue Mar 5, 2013
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