The other day, I was cruising through my Facebook newsfeed and noticed a link that a good friend had shared with her daughter. The link said "Rent to Own your Home". Her daughter and several friends had "liked" the link. I cringed because my professional experience has been that MOST of the time, rent-to-own situations turn out to be bad news for one or both parties.
What is Rent-to-Own? Typically in a "rent-to-own" a portion of the rent will be applied towards a future down payment or closing costs when you go to buy the home.
Sounds like a great idea, right? It can be, but I CAUTION YOU, never, ever get involved in a rent-to-own contract without the advice and guidance of a Real Estate attorney. Too many times these contracts are written to benefit the seller and don't protect the interest of the buyer. Many times these contracts are too vague to cover all the situations that could and can arise in a rent-to-own agreement.
What could go wrong?? SO, SO many things could go wrong.... but I will discuss two situations I have encountered personally. In one case, I had a person call me in a panic because she had been in a rent-to-own home for over a year and the bank had just changed the locks and the marshals evicted her. It turns out the property owner had been pocketing the monthly rent and not paying the mortgage, and the home was in foreclosure. On the property owner side, I have seen where a well intended rent-to-own purchaser started out the agreement paying their monthly rent, but because of a multitude of factors, that person stopped paying and essentially became a squatter. In these cases, the home can not only be difficult to take back but it can also be severely damaged.
What is an alternative? I think many times people look to get into a rent-to-own situation because they don't have money for a down payment or they have had credit problems. My advice is to get the facts of your situation, don't speculate or assume. Talk to a lender, and let them evaluate your ability to buy, and explain to you the different programs available. You may be surprised at how little $$ it can take to purchase a home, or what credit challenges can be overcome.
My advice......... ALWAYS talk to a professional before signing a contract. Talk to a Real Estate attorney, talk to a Realtor. Taking the time to get professional advice is only going to save you time, money and inconvenience..... I am always available to share my professional experience and advice. I can also refer you to lenders who can determine your situation very easily and explain to you your options.
Final thought, if it seems too good to be true.... it probably is. Trust your instincts and double and triple check a situation before you jump in. You can call, email or text me ANYTIME for advice, guidance or references.