Houses for Rent to Own – The Good, The Bad, The Ugly!

You probably wouldn’t be reading this if you weren’t interested in looking at houses for rent to own.

Even so, you may have heard statements like “Rent to own homes are never good for the buyer, they only work to the benefit of the seller.”  Let’s take a look at why you may have heard this and what you need to understand to make sure you get a good deal.

Why Houses for Rent to Own got a Bad Rap!

There is a group of real estate investors who propose using rent to own homes to take advantage of uneducated people who also happen to have bad credit.  They acquire properties and then advertise them as houses for rent to own.  Typically, they advertise very attractive terms like “100% rent credit”.  (Anyone who understands real estate knows that this is a huge red flag.  A 100% rent credit does not mean anything because no lender will allow this!!)  Their plan is to lure you in and make you think that the rent to own home deal is structured in your favor.  Sadly, this plan very often works.

In all reality, the contract is almost always structured so that no matter what you do you can NEVER PURCHASE THE HOME.  Yep, that’s right.  These investors don’t want you to buy their home.  What they want is to collect an option fee from you now, and collect it again from you or someone else in 6 to 12 months.

They use contract structure to make sure you can’t buy the rent to own home.  Typically, terms will be less than 12 months.  Very often, the term that they offer is 6 months or less.  On top of this, they have you agree to a purchase price that is so high, you could never get a mortgage because the home won’t appraise.  They don’t require you to work on credit repair, because they have no plan of you ever actually getting a mortgage. In fact, they would prefer that your credit stay bad, that way you not purchasing the home is your fault not theirs!

Key things to look for in a Rent to Own Home Contract!

Now, fortunately, there are programs (ours included) that are designed for your success. The method here is to offer rent to own houses, with the ultimate goal of you qualifying for a mortgage and buying the home.   Here are things to look for be for you buy a house for rent to own.

• A term that actually gives you time to qualify for a mortgage.  Typically, 24 to 36 months, depending on your individual situation.
• A fair price.  Remember, you shouldn’t expect to get a discount like you would get if you were able to give the owner cash today.  Still, the price should be reasonable.
• Assurance that the home is not presently in foreclosure.
• A requirement that you begin credit restoration and credit repair.  Shouldn’t a seller who is serious about you buying their home want to know that you are actively working to rectify your credit situation?

Next up, we will discuss the many buyer benefits of houses for rent to own! This is important information to know when you are looking for a rent to own house so stay tuned!  You also might want to check out our rent to own homes listings!

Tagged as: houses for rent to own, Real estate, rent to own, Rent To Own Home, Rent to Own Homes, rent to own houses