Home Buying in Rye Brook>Question Details

Lorne Caplan, Home Buyer in Rye, NY

I've found a house that have been listed for some time and would like to do a rent to own. Any advise?

Asked by Lorne Caplan, Rye, NY Thu Sep 4, 2008

In doing a rent to own, I would be able to build up equity in the house, while doing repairs and offering the owner freedom from mortgage and tax issues that see him falling into pre-foreclosure. I feel it is a great option for the owner, but for some reason, he isn't interested despite having listed his home for over 6 months. It needs substantial gardening (tree felling) and the interior is all original circa 60's. I'd like to be able to deliver a mutually beneficial proposal that the owner would welcome, but I fell like I've missed something. I've identified one house in Rye Brook and have looked at an owner occupied disaster in New Rochelle. The New Rochelle house isn't for sale, but is an eyesore in a very desireable area. Short of dropping a note in the owners mailbox to ask him if he is willing to sell (the house on the outside needs a new roof, serious pointing, gardening, new walkway, upgraded windows, I'm guessing after seeing the inside, it may be a tear down). Any advice?

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Hi Lorne,

I have been in the business over 25 years and I don't remember ever seeing a rent-to-own situation work.
Most of the attorneys in this area do not recommend that scenario.

If the owner is living in the house, they might need the funds from the sale to go on to the next step in their life, they don't know you so they feel that they might be getting into a difficult situation.

I know some of my fellow brokers won't like this, but a note in the mailbox isn't a terrible idea, if you are shy about contacting an owner, I am sure any broker would do it for you.

If I can help in any way I would be happy to.

Kevin O'Shea
Homes of Westchester
914.262.1931
0 votes Thank Flag Link Wed Oct 22, 2008
my opinion on a rent to own is the following:
i think it works well if you do not have the downpayment and your credit is not good. but it works in general also. its a very good option for the owner. he may not have to move, so his motivation is low. i would list the advantages to the owner and show him.

i would offer the owner a generous deposit and an above market rent with a portion of the rent going toward the purrchase price.

hope this helps
0 votes Thank Flag Link Thu Oct 2, 2008
The homeowner might be wary of getting into a situation where he has to be in business with you (or maybe anyone), rather than an outright sale. If I were in his shoes, I would find it nervewracking to have to essentially become a landlord - collecting rent, worrying about the condition of the house - if what I really wanted was to sell the place. Maybe he understands that you have good intentions - felling trees, updating the interior - but at the same time, he doesn't want to relinquish control of those things.

Besides, six months isn't that long for a home to be on the market. I've seen homes here in Northern Westchester on the market for more than a year at a time before selling. So, perhaps the homeowner is not yet desperate enough to get into an ongoing business deal with someone, rather than just selling his home. And you say "pre-foreclosure"...perhaps to him, that isn't that urgent yet?

Anyway, what is in it for you in a rent to own situation? Wouldn't buying be better? If you don't yet have the downpayment, then why not wait it out, as the market plummets?

Oh, and you SHOULD drop a note in the owner's mailbox in New Rochelle. I have a friend who sold her house that way...she got a note in her mailbox and an offer she felt she couldn't refuse!

Best of luck.

Lauren
0 votes Thank Flag Link Mon Sep 29, 2008
Lorne,
You are right that it would seem like a logical fit if a person were in trouble. However there are many factors that may be playing into this if the seller is in pre foreclosure. First off how deep are they in the hole? If they bought the property a while ago chances are that their home has equity, as Rye Brook has remained stable in this volitle period, but maybe they have not yet come to grips that this is a buyers market. If they are in way over their heads then a rent to own just does not do anything for them as the rent you are offering may not keep them afloat.
Also keep in mind their are several factors that may not make this a lucrative offer. How much of the rent are you planning to use towards the eventual purchase price? What exact sales price are you offering in relation to what they are asking? Finally any work that you may do has a risk factor as well. I live and work in Rye Brook so I know that the town is on top of any work that gets done. As a result current owner would have to be concerned with properly insured professionals doing the work and having proper permits. That does not even take into consideration quality of work, style, etc that will have an impact on sales price if you choose not to buy the property.
Certainly you should pursue this if it makes sense for you personally but many sellers, especially in pre foreclosure are not looking to become a landlord. But with interest rates recently dropping and an increase in inventory there maybe other options out there for you. If you have any questions, especially pertaining to Rye Brook please feel free to contact me.

Andrew Rogovic
Assocaite Broker Prudential Rand Realty
0 votes Thank Flag Link Thu Sep 11, 2008
It sounds like you have put your thoughts in order. We have to consider the emotional and financial situation of the owners/sellers.They may not have a place to go when they sell ,if they are that financially strapped. They may be to far behind to catch up on their mortgage and then you'd have to get permisssion from them(the owner) to speak to their bank about a "short sale " and I am all but certain that you would have no chance of getting a rent to own agreement from the bank.
To keep the negotiation on a business level it may be best to seek the help of a broker to represent you.
0 votes Thank Flag Link Thu Sep 4, 2008
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