Rent To Own, Good Idea?
So you have seen the signs and maybe even considered it, Rent To Own. Rent To Own can sound so easy and really simple. You are paying rent anyways why not have it go towards buying a home as well, harmless right?
The reality I have found is Rent To Own properties rarely work out to benefit the buyer or in this case renter. The issue I have seen is they are not properly executed meaning there is no contract, no public record and no attorney involved either. This leads to confusion, misunderstanding and possibly nothing legal about it.
First let me say there are people that are doing it correctly, but that is beyond rare to see. A properly executed rent to own situation would be handled by an attorney, filed in the county records and in writing. The vast majority unfortunately do not fall in this category.
Remember title stays in the seller’s name, for that reason the buyer is at a disadvantage. The seller could have a mortgage, which means if they don’t pay they could get foreclosed on, meaning the buyer/renter is out as well. How can a renter be assured the seller is making the payments? Who has insurance on the property?
What happens if the seller gets divorced or dies, will their family respect the agreement in place? My experience has told me no, family wants to sell and not deal with any headaches. This would mean the buyer is out of luck, out of a house, out their money and out any improvements they have made. Speaking of improvements, would you be able to do any improvements on the home knowing you could lose that money?
As you can see there are many risks of doing a rent to own which is why I don’t recommend it. Even the state has no promulgated contract to address this type of transaction which should give you a strong indication that it should not be done. Instead save for a down payment, fix your credit and work on getting approved. Yes it will take time and money but in the long run you will so much better off.
With a heart of a teacher I look to educate my clients about the process of buying, selling or renting real estate. I strongly feel an informed and educated consumer will make better decisions and be less likely to be taken advantage of.
Have questions about this or other topics, don not hesitate to contact me.
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Luis Cuevas, Realtor®
RE/MAX Cross Country
1990 Justin Road
Highland Village, Texas 75077
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