Home Buying in 60620>Question Details

Kandygyrl, Home Buyer in 60620

i want to get into a rent to own property, what do i need to do??

Asked by Kandygyrl, 60620 Thu Aug 25, 2011

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Good luck trying to find one and they are a horrible idea for the buyer/tenant and usually a bad idea for the seller/landlord. Buyers mostly get ripped off.
Keep renting while you fix your credit or whatever it is that is keeping you from buying now and when you qualify for a mortgage, even if it is 1-3 years from now, then buy. This market is not about to change very fast so you will still find decent deals.
1 vote Thank Flag Link Thu Aug 25, 2011
Based on my personal experience working with credit challenged individuals most of the rent to own situations do not result in homeownership. In fact, it is amazing how unrealistic the expectations of most of these people were compared to outright buyers. I have witnessed several individuals walk away (loose) very large sums because they were not able to complete the transaction once the option period was up and lost their deposit. Does it ever work out? Absolutely, just not as often as you may expect. Most are simply pacifiers and end up being extremely expensive rentals.

If you do a recorded contract for deed the existing mortgage may be called due by the lender. An unrecorded version is not as protective. A true lease to own assumes financial stability of the seller, something that may not be the case. And I have seen some very poorly structured rent to own contracts where the tenant/buyer thought they were accumulating a down payment with all or part of the rent. Underwriting guidelines for getting a mortgage to complete the purchase do not match that scenario; they are very specific what part can and can’t be counted towards the down payment. It doesn’t matter what the buyer and seller agree to if it can’t be approved for a loan when the time comes.

Get to the bottom of why you need a rent to own before making a move, create a plan to fix the problem, then stick to the plan. Double what ever time period you think is necessary to fix the problem, nothing goes as planned. Base your contract on the double time frame. Include your Realtor and their favorite loan officer throughout the process, not following this last suggestion really increases the odds of failure. You may need to pay your Realtor directly if your deposit is not substantial enough. Hope this is helpful.
0 votes Thank Flag Link Thu Sep 1, 2011
This has to be something that the Landlord is amenable to extending to you. The best way to do a rent-to-own for the consumer is to have your Landlord agree to credit monthly rent payments to an amortization schedule. Some landlords might not like this because then you could be considered a mortgagee (which implies ownership) instead of a tenant in court.
0 votes Thank Flag Link Wed Aug 31, 2011
In the proper circumstances, this can be a very good thing for both buyer and seller. There is no blanket answer that covers all scenarios, so it is not always bad or always good.
I would be glad to show you how to make this work, but it has to be the right property and seller.

Like short sales and REOs, you need a Realtor who has the experience and knowledge to be certain you get a fair and balanced agreement.
0 votes Thank Flag Link Thu Aug 25, 2011
These can be risky because there are a lot of ways to forfeit or get screwed out of your money. If you do this, make sure you get an attorney involved. I recomment talking to an agent to get you into the property.
0 votes Thank Flag Link Thu Aug 25, 2011
Bad idea who is going to monitor the earnest money and the rent. Better to try to buy or just rent. Speak with
a loan officer and I have several that can help you with downpayment or credit issues. The best time to buy
is now with low interest rates and reasonable priced homes Debbie Bergthold-Classic Real Estate
0 votes Thank Flag Link Thu Aug 25, 2011
Hi Kandygyrl,

Definitely get an attorney involved. I personally have never done one of these & I deliberately stay away from this type of transaction.

Make sure your attorney is holding the deposit money and that interest is being accumulated and that all the terms of the rent to own are SPELLED OUT CLEARLY, leave no room for misunderstanding.

Good luck!
0 votes Thank Flag Link Thu Aug 25, 2011
I have 2 units you may be interested in... a 2 bedroom/1 bath in Lincoln Square or a 1 bed/1 bath in Rogers Park... 7334 N Ridge Blvd... Let me know if you are interested.

0 votes Thank Flag Link Thu Aug 25, 2011
Make sure any large deposit or earnest money you give ends up in escrow account managed by a real estate brokerage or an attorney who is responsible for your money and not in the hands of an individual owner.
0 votes Thank Flag Link Thu Aug 25, 2011
You should find a Realtor and Mortgage Banker who is experienced with these transactions. Call Betty Clayton at Common Ground Properties at 773-488-8466.
0 votes Thank Flag Link Thu Aug 25, 2011
A good agent. Decent credit and a motivated seller.
0 votes Thank Flag Link Thu Aug 25, 2011
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