i filed bk, and i cant buy until 2014 is rent to own a good way to go? or should it be best to wait. thank you for your time

Asked by mytotoys, 91942 Mon Sep 10, 2012

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Number One P…, Agent, Cheyenne, WY
Mon Sep 10, 2012
Don't give up on buying because of bankruptcy. Once you are out of BK and have had the case dismissed or the plan approved some lenders who do not sell their loans to Freddie Mac and Fannie Mae (who tend to be private investors or small local banks) will make loans to people who are just out of bankruptcy. They may require some stricter downpayment requirements and you will not get the best interest rate but you can still find a lender if you are employed and other than the bankruptcy blight have decent credit (it will depend on the lender).

The trouble with lease options is that in most cases the owner still has a mortgage on the property and a lease option triggers an alienation or due on sale clause in most loan documents. So you and the owner at risk of foreclosure if a lender finds out. If you request their approval you will have similar issues as you do in a straight purchase.
1 vote
Michael Robe, Agent, El Cajon, CA
Mon Sep 10, 2012
This all depends on the terms you can negotiate on the lease option agreement.
Since there is no "concrete" lease options it is really up to the principals and the agents to come up with something that works for both parties.
As per waiting, I do believe there will be good loan products available for those that have BKed, Short Sold a home or lost one in foreclosure in the future. The timing, in my opinion, has much to do with when the economy rebounds.
I hope this helps and please feel free to contact my office with any additional questions you may have.
Thank you.
Michael Robe
619 590 3008
1 vote
Cory La Scala, Agent, San Diego, CA
Mon Sep 10, 2012
Rent to own, known as lease options to investors, is an investment technique investors use. It doesn't really make sense, you might lose out two ways. First, you pay higher up front, about 5% of the purchase price plus extra rent each month. The regular rent goes to the owner, but the additional payments are used to buy down the price of the home. Second, the investor will try to get you to take the shortest option period possible, banking on the fact that you won't be able to exercise your option by the end of it (most renters won't qualify for a loan).

For example, if you buy a $275,000 home, paying $7,500 up-front and a rent premium of $500 a month on top of their $1,600 market rent, you'll have $13,500 saved after one year and $25,500 after three. But, if you just did that onb your own, you'd have the same amount - with interest. And, in this market, prices aren't exactly skyrocketing.

One disadvantage is if you can't qualify by the end of your option period, usually 12-36 months, you paid all of that for nothing, and you might not even want the house anymore. You may be able to get a contingency worked into a contract for the return of the extra rent and up-front payment in a buyer's market. Another disadvantage is negotiating a purchase price and then market values fall. Still another is the owner who negotiates a lease option, but doesn't tell you he's in foreclosure, and the home is repossessed without your knowledge, a scenario far more likely in this market.

But, it'll only make sense if you can get a long option period, AND you know you'll be able to qualify at the end of it. But, if you can save 3.5% for a down payment for a FHA loan by the end of the option period and still get a similar house, you won't need to do a lease option, and you'll have many more houses to choose from.

Do a search on lease options, and you'll find a lot of information on this investment technique, because that's what it is.

Good question, and good luck! Call or email anytime with questions.

Warm Regards,

Cory La Scala, REALTOR
Independence Realty
1 vote
Cindy Davis, Agent, San Diego, CA
Mon Sep 10, 2012
Rent to own could be an options for you - the problem is that there are just not many of them around these days. Rent-to-own options are popular int he days when homes were harder to sell - which is NOT the case now. With limited inventory, homes are flying off the shelves!

So, I think it's fine to keep your eyes out for such a deal, but in the meantime, I would seek a good rental for yourself. Take a look at the craigslist real estate section - I HAVE seen rent to owns there...

Best wishes.
1 vote
Kari Shea, Agent, San Diego, CA
Mon Sep 10, 2012

You have received a lot of good advice. We agree with Kevin in terms of direction. If you do find a rent-to-own home, have an attorney draw up the agreement so both parties are protected in the deal.

Best to you,

Mark & Kari Shea
Shea Real Estate
Serving Greater San Diego
0 votes
Kevin Sander…, Agent, San Diego, CA
Mon Sep 10, 2012
Just rent for now. Focus on saving up money for when you are ready to buy. If you try to rent to own, you put your self at risk of losing tens of thousands of dollars. Just not worth it.

Kevin SAnderlin
Keller Williams Realty
Cell 858-212-4702
0 votes
, ,
Mon Sep 10, 2012
Nope, more info linked below, good luck,

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
0 votes
Karen Hubbard, Agent, El Cajon, CA
Mon Sep 10, 2012

"Rent to Owns" rarely turn out good for the "Buyer". You are likely to pay more than market value and settle with terms that are not best for you, the "Buyer". These agreements are often to the advantage of the "Seller". And, are usually available because the "Seller" can not sell the home for some reason and/or is asking so much that no body will buy his home. Thus he offers a "Rent to Own" and draws in someone that can not buy a home due to one reason or another.

My advise is to take the steps to regain credit in your life and wait. Once you are in position to buy again you will have opportunities to buy a good home at a good value with good terms.

My Best To You!
0 votes
Robert Chome…, , San Diego, CA
Mon Sep 10, 2012
Rent to own (AKA lease option) may be a good option, but get educated on it first. I recommend John Schaub or John T. Reeds's books on it (Google their names + lease option).

-make your you record your option agreement
-negotiate a portion of your payment to go towards paying down the purchase price
-negotiate the smallest up front option money you can
-negotiate the longest lease period you can
-try to look at the comparable properties and don't over pay with the option price
0 votes
John Arendsen, Agent, Leucadia, CA
Mon Sep 10, 2012
Personally I have been very sucessful with RTO and/or lease option deals in the past as an investor helping folks who are struggling with credit, employment and/or income issues. However, rules and regs have changed over the years making this type of RE transaction a little riskier for the investor.

You really need to get with a RE professional in the area you wish to rent/purchase in and see if they can come up with some viable possibilities or alternatives for you. I'm in North County and don't service the El Cajon area but there are many very fine RE professionals in East County that could help you.
0 votes
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