Posted by
Vance Vinson

Is rent to own as toxic as it's made out to be?

I'm wanting to buy a home but my credit history is littered with mistakes that I am still paying for. I have done research on the subject of rent to own and since the laws have changed governing this issue, it seems most are against the idea. Is it really that bad?

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Is rent to own as toxic as it's made out to be?

By Vance Vinson   
Posted on Aug 02, 2017 in Topic: Home Buying
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I'm wanting to buy a home but my credit history is littered with mistakes that I am still paying for. I have done research on the subject of rent to own and since the laws have changed governing this issue, it seems most are against the idea. Is it really that bad?
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Viewed: 447
Asked by: Consumer
Posted: 3 weeks ago
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Bronze
Michael Jobin
about 3 weeks ago
Hi Vance,

I'm sure you will get the spectrum of opinions from agents. I feel they are not as toxic as they are made out to be providing you spend a few extra dollars with a Real Estate Attorney to write a contract that overcomes the typical pitfalls of a lease to own. It is not enough, to go in with blind faith the contract will hold up to all the obstacles. As the renter/purchaser you need to be careful about the rent and delays of rent and how that changes the amount towards the purchase price and then the time associated with rental vs. purchase. You need to be very clear on you goal. Are you renting giving you time to improve your credit and then buying based on 1st right of refusal or are you buying asking the seller to carry the note. Things to think about.

Second hurdle is finding the right home with a seller willing to lease option.

If you can learn from the horror stories and create a contract that you and the seller can live with, I do not believe it is not as bad as some make it out to be.

Michael Jobin
C&K Properties
713.545.2314
MJobin@Jobee.com


about 3 weeks ago
Bronze
Chantress Morris- Rodriguez
about 3 weeks ago
Short answer... Yes.

Long answer.... agreeing with the earlier statement an attorney is absolutely necessary. Granted you find a seller willing to do what's necessary to provide a legally binding contract with an attorney as well. After its all said and done you'd probably see more benefit taking the time and money to just address what ever is holding your credit down.


about 3 weeks ago
Gold
Mark McNitt
about 3 weeks ago
Hi Vance,
We get this question often on this forum. Because there are so many "what ifs" in a rent to own contract, they advise you (the Buyer) not to do this. A true rent to own would involve agreeing to a sales price, inspection process, closing dates set, a sizeable down payment that likely would NOT be refundable AND then you rent as you working your way to a closing date. If you don't get the loan by the closing date, you loose a lot of money and your back to square one. And those doing this without a Realtor are prime candidates to get scammed by a Seller up to no good.
If your credit scores are poor, if you don't have a lot of money to put down towards a purchase, you are just starting a job or other issues that will keep you from getting a mortgage, then you're not ready to buy. As much as you want to buy, your financially not strong enough. There are ways to get yourself ready and a good loan officer can discuss this with you. It may take another year or two, a lot of saving and hard work correcting issues on your credit report, but at the end, you will be stronger financially, you will obtain better interest rates and be able to purchase with a smaller down payment. Let us know if you would like to discuss the topic further. Don't give up!

Mark McNitt
832-567-4357
www.MarkKnowsHouston.com
Bernstein Realty


about 3 weeks ago
Bronze
Joe Miles
about 3 weeks ago
It can be a very bad experience for your client. Unfortunately, there is a very strong financial incentive for the landlord/owner to do the wrong thing the closer the tenant/buyer comes to the end of the contract. For example, let's assume a 30 year or 360 month(s) contract. Your client has completed 354 payments without any significant events; however, the 355th payment is late. Instead of accepting the late payment, with a fine, the landlord/owner decides to foreclose.
When you make such a long-term commitment with an individual instead of an institution, you are placing an awful lot of trust in this individual. How do you trust someone with the fate of your client's home. What is the recourse if this trusted individual betrays that trust? At least with a company, there are avenues and remedies readily available to correct bad behavior. What if the landlord/owner files bankruptcy and the courts seize the property?

Long-term deals have the possibility of going bad; however, when you are in a deal with an individual the corrective action options are limited and complicated.


about 3 weeks ago
Bronze
Doris Snipp
about 3 weeks ago
Lease purchase can only be done by an attorney in Texas. There are so many pitfalls. The owner could not make payments on the mortgage, keeping your money. The owner could die and heir ship or wills could come into play. There is no deed recorded in your name. Why not lease, until your issues are resolved, get pre-approval from a mortgage lender, pay down debt and ensure you have enough money for the down payment and closing at the time. When you are ready, make an offer to the landlord to purchase or you may find one you like better


about 3 weeks ago
Bronze
Shawn Respress
about 2 weeks ago
i am a realtor and i have multiple friends how are realtors and attorneys who can make sure that you do not get taken advantage of ether as the land lord or the renter give me a call i will put you in touch with one of them
832-338-6854


about 2 weeks ago
Gold
Dominik Szabo
about 1 week ago
First of all for Rent to Own, the Texas legislature has made it next to illegal, due to the number of people who were burned in the process. If you would like to proceed the same consult a real estate lawyer who can draw up the specialized contracts and procedures necessary for you.

The most important is to be informed, as the saying goes there are no bad investments, just bad investors (Uninformed).

Dominik Szabo
Brockway Realty L.L.C.
(832) 844 1724
DominikRealtor.com
** The Doctor of Real Estate in Houston Texas **
" Professional, Courteous, and Informed "


about 1 week ago
Disclaimer: Answers provided are just opinions and should not be accepted as advice.
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