5 Thoughts on Has anyone ever have a house to rent to buy, and how did she do?
  1. Reply
    Major Move
    December 10, 2012 at 12:31 pm

    It makes no sense… the person leasing to you cant give u the loan for the house…

    Its a trick, a way to get money from u while renting …

  2. Reply
    December 10, 2012 at 1:25 pm

    Yes. Beats paying rent. If you decide to but the lease payments should go toward purchase price. Usually with a lease you pay less than with an open end rental deal because the owner has you for the duration of the lease and if you buy?

  3. Reply
    robert w
    December 10, 2012 at 1:40 pm

    Keep Renting until u saved enough and learn to increase ur income , then buy out right.
    we have had over 25 ‘lease to own ‘ contract over the years. Only one of those completed the contract and even then they defaulted on the loan in five years.
    we made good money, they didn’t
    Get ‘house buying for dummmies ‘ Read
    get ‘total money makeover’ d.ramsey Read.

  4. Reply
    Anthony S
    December 10, 2012 at 1:54 pm

    I done it as the seller and the buyer. It is a great way to take over a house without paying a lot of money.

    Make sure you are dealing with a lawyer who has experience in writing lease options contracts.

    Have the title of the house held in escrow with your lawyer or title company, so even if the owner of the house has died, you can still exercise your right to buy the house.

    Have the owner inform the mortgage company, you are now managing the property and all payments will be coming from you. This way you can be sure the mortgage is getting paid.

    Make sure it is written in your lease agreement, you are not paying for major repairs. Have a dollar amount of 500 you will pay, and everything over 500 the owner will pay.

    Also make sure the option agreement allows you to assign (sell) the option and your lease agreement allow you to sub-lease the house.

    Have the owner sign and the lawyer record a memorandum of option. This will cloud the title and should prevent the owner from getting another mortgage, or selling the house from under you.

  5. Reply
    December 10, 2012 at 2:17 pm

    I have purchased and sold a house on lease option. Here’s the basics of how it works

    1. You sign a lease for a set period of time (typically 1 to 3 years). During this time you are basically a renter in the property, meaning you have all the responsibilities of a renter (security deposit, renters insurance, cleaning deposit, etc), with the exception that a certain amount of your rent payment (typically $ 50-$ 200) is credited towards the down payment when you purchase the house after the lease period. Also during this time the owner has the responsibilities of a landlord… if the water heater goes out it’s his/her responsibility to fix or replace it, they are responsible for property taxes, insurance on the property etc.

    2. Many times the person who owns the house will then carry the contract on the purchase after the lease period. Meaning rather than making payments to a bank for a mortgage you make your payments to the landlord.

    Here are the good points:

    1. If you do not have good credit this is a good way to get a house, especially now with the lack of subprime loans available.

    2. Can buy a house with very little money out of pocket initially. Usually 1st and last months rent plus a security deposit.

    3. If you’re new to an area you can “try out” the house and area without making a long term committment. Let’s say you sign a 3 year lease option but in year two you find out there is a really bad mold problem. Since you are not the owner it is not your responsibility to repair.

    4. It can help your credit. 1 to 3 years of documented paying on time will help get a mortgage in the future.

    5. A lot less paperwork. And a faster move in date. No waiting for appraisals, home inspections, etc (Although if you can afford to pay for these on your own I would highly recommend it. An appraisal will run $ 100-$ 350 dollars a home inspection around $ 100-$ 200). If you can find someone who is just starting out in the home inspection or appraisal business then that’s great because many states require they do so many for free before they start charging. Sometimes you can find those people by running a cheap ad in the local Penny Saver type publication.

    6. You lock in a buying price at today’s market value rather than what the home will be worth in 1 to 3 years (could also be a negative if the home value drops)

    The downside:

    1. You will probably pay more in rent than a similar sized unit in the area… because a portion is being applied towards the purchase of the house.

    2. If the owner carries the mortgage after the lease period you will probably pay a higher interest rate.

    3. Many experienced lease option owners will put in the contract that if you are late on X number of payments then you forfeit all the money being applied to the purchase of the home, so read your contract carefully.

    4. If you decide to NOT purchase the property at the end of the lease period then the “extra” money you paid to be applied towards the purchase price of the home is forfeited.

    Bottom line: If you do not have good credit, nor a lot of cash for a down payment and are not good at saving money a lease option is not a bad way to go. But you have to be careful to not overpay for the house, if houses in the area are selling for $ 50,000 don’t agree to pay $ 65,000 for the house, you should still be able to get it for market value. I would also only purchase from someone who has experience as a lease option owner. You don’t want to get stuck with someone who doesn’t understand their responsibilities or not have the cash reserves to fix problems when they arise.

    When I bought a house on lease option, I purchased from a seller who that was what he did, he bought homes for cash, fixed them up and sold them via lease option. I ended up not purchasing the house after the lease period because I got married and needed a bigger house, but for 3 years I had a nice place to live and could feel like a homeowner (mowing the grass, doing the landscaping, etc). Just be sure to do your homework. You should make sure:

    Pay a fair market price for the home

    Rent payments are in line with the area (again it will be a bit more because of the credit towards the purchase price)

    The house is in good condition

    The person you are leasing from is a good landlord (ask for references and talk to them) a good landlord will provide this information willing, if they won’t then buyer beware.

    Do your research on the property… make sure there are no liens against the property, no one was killed at the house(greatly lowers property value), etc.

    Read the contract carefully. I have discovered over the years than many people with bad credit (I’m not saying you do, but that is who typically wants to buy a house on lease option) feel they just have to accept whatever the seller says because they are helping them out. And that’s not true. Things like purchase price and rent are probably not negotiable, but there are other things in the contract that are (grace periods before a payment is late, security deposit, responisbilities, etc)

    I hope this helps.

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