Home Buying in 60623>Question Details

Feliciaof07, Home Buyer in Chicago, IL

when renting to own do you have to pay rent to the previous owner?

Asked by Feliciaof07, Chicago, IL Fri Sep 23, 2011

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6
Philip's correct. Your question suggests you don't understand rent-to-own.

I disagree with him about avoiding rent-to-owns (lease-options, lease-purchases, etc.) But you have to know what's involved.

Here's an answer to your question: When renting to own, you pay rent to the current owner. That owner is your landlord. At some point in the future, you will purchase the property from him.

Please study up on rent-to-owns.

Hope that helps.
1 vote Thank Flag Link Fri Sep 23, 2011
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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It is clear by all the questions you ask that you have no clue what rent to own is all about and this makes it more important that you never do it. You will reget doing it.
1 vote Thank Flag Link Fri Sep 23, 2011
You have to understand that when renting to own, you are first a renter. You sign a lease and pay the landlord, and then at the end of the lease period, you have the option to buy. I hope this helps but if you still have questions, feel free to call.
1 vote Thank Flag Link Fri Sep 23, 2011
Are you referring to rent with option to buy?
If so, you should be paying rent to the current owner (not a sublet tenant). Very basically, the renter pays cash for the “option” to purchase the property from the current owner. An “Option” requires “consideration”. Consideration is monies.
Here’s a very important thing about these deals… The property owner is given the option money. If the renter chooses not to buy, the owner keeps the option monies. If it’s as simple as a part of rent monies going to the option, the renter isn’t financially hurt if they don’t buy. On the other hand, if the renter puts up cash up front for consideration and does not buy, the renter suffers a financial loss, as owner keeps the consideration monies.
There are problems with this for both owner and renter. First of all, how is value determined today following a 1 year lease? Value will probably be lower than today. How much lower? Realistically, I can’t think of a reliable way to determine property values 12 months into the future.
On a good note, I recently did a rent with option to buy. The property owner was honest. Realizing all of the above, he charged one dollar for the option to buy. We need more people like that.
A word of caution… Make sure you aren’t residing in a property with a financially distressed mortgage as your option won’t apply to a short sale, or worst, a delinquent tax sale.
0 votes Thank Flag Link Sun Sep 25, 2011
yes.. they are not previous owners.. they are your bank and current owners.. your renting
Web Reference: http://www.joeschiller.net
0 votes Thank Flag Link Sun Sep 25, 2011
Not sure the question is understood--generally, in a rent to own scenario one has the option to buy at the end of the agreed lease period; therefore payments need to be made in accordance with that agreement....for any necessary legal advice, consult with an attorney who specializes in real estate.
0 votes Thank Flag Link Fri Sep 23, 2011
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