Home Buying in Evansville>Question Details

mastaj.1999, Home Buyer in Evansville, IN

Rent To Own/Contract

Asked by mastaj.1999, Evansville, IN Mon Feb 11, 2013

Are there any realtors that have any clients who are looking to do a rent to own/contract?

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Yes, I always seem to have some clients that are looking at rent to own. We would need to discuss what you have to offer and your terms along with some references.
0 votes Thank Flag Link Wed Aug 21, 2013
Is there a reason you can't qualify for a mortgage? Instead of throwing away your money on an rent to own property which is merely a lease until you can buy it out right, why not take the time and money and invest it on yourself. Qualifying for a mortgage isn't that difficult. Let me help you qualify for a mortgage.

Have a great weekend.

Christina Solorzano;
CEO & SR Credit & Mortgage Consultant of
Everlasting Credit
Ex-Mortgage Broker of more than 10 years
0 votes Thank Flag Link Sat May 4, 2013
Homes with a value below $50K are difficult to mortgage because the lenders don't want that kind of collateral in their loan portfolio making the buyer have to pay the full amount in cash at closing. This is the type of house the seller finds himself selling RTO. If the buyer has a 20% downpayment, good rental payment history verified by the previous landlord, and a debt to income ratio below 40% including your mortgage payment with taxes and insurance they can RTO. You need to hire a good attorney to write an enforcable contract commonly sold by the owner.
0 votes Thank Flag Link Thu Feb 14, 2013
Yes there are clients looking for RTO options. There are very few homes with that option due to the risk for the seller. If you are looking to buy with this option, or sell your home with this option I can help you and advise about the potential pitfalls. Cal me today.
0 votes Thank Flag Link Wed Feb 13, 2013
There are a lot of people looking to rent to own. It can be done, BUT there can be a lot of reasons why it may not be a good idea.
First, why would someone want to rent to own instead of just buying? Usually it's because they don't have the down payment or can't qualify for a mortgage. If they can't qualify now, why would they qualify a year from now? Is it bad credit? Great, you rent your home to someone who has established they don't pay their bills. Is that what you want?
Second, in order to make it fair to yourself you want to get some additional money up front. Say the house is worth $200k and the rental is $2,000 per month. You might want to get 2% or $4,000 up front. Add this to a months rent and a months security and you get $8,000. An FHA mortgage at 3.5% down is only $7,000. Why don't they buy? Odds are they don't have the $8,000. How do they plan on saving it over the next year?
Third, if you don't get money up front, what do you have? If the house goes down in value they won't want to buy. Their easy out is they can't get a mortgage. You've lost the opportunity to sell at a higher price. If the house goes up in value then they buy the house and you've lost any appreciation in value as the price has already been set. No risk to them.
A rent to own contract or a rent/option is usually a loser for a homeowner. It can work in extenuating circumstances. If you get a nice upfront down payment and charge additional rent each month to be applied to the down payment it can be to your benefit. If they don't buy you have a lot of extra money in your pocket. If they do buy then you really haven't lost anything as selling a year earlier when you signed contracts was the price you would have gotten anyway.
Don't stray from this type of deal structure and you should be fine. If the potential buyers do have bad credit and can't get a mortgage at the start, find out why they have bad credit and ask for proof. Sometimes people have a nasty divorce and credit gets hurt in the process. This is understandable, but ask for proof that this has happened and a full credit report. You need to stay firm on these things or you could end up with a nightmare.

Good luck!

Donald A Mituzas
Licensed Associate Broker
2008 Realtor of the Year
Director - Hudson Gateway Association of Realtors
Douglas Elliman Real Estate

0 votes Thank Flag Link Tue Feb 12, 2013
There are a few homes available that the seller's willing to do a contract sale. Contact me for more information. shawnmaglinger@fcte.com
0 votes Thank Flag Link Tue Feb 12, 2013
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