RENT TO OWN - WHY IS IT A "NO-WIN" SITUATION?
We have a number of people call looking to see if we have any "Rent-to-Own" houses. ABSOLUTELY NOT!! So let me climb up on my soap box and tell you WHY it is a VERY BAD investment/loss of money for the renter/buyer.
1. The owner does not want to make needed repairs (and there will be a lot of expensive repairs).
2. Owner wants tenants that will give them money every month no matter what.
3. Owner will not make any repairs the entire time tenant lives there (unless in writing prior to move in).
4. Tenant never owns the property (deed is not transferred nor are taxes in tenant's name at "occupied" rate).
5. Any improvements that tenant makes to the property are never reimbursed.
6. Contractors will not do work or let tenant "charge" for work done because tenant does not actually own it.
7. Tenant will lose any "down payment" or "security deposit" money when they get frustrated and move out.
8. Owner never signs over the deed to the tenant who may have lived there a month or 30 years.
9. Owner can at any time SELL the property right out from under tenant and take advantage of any improvements.
10. Owner/Seller can have a mortgage (or obtain one) while you are supposedly "buying" the house and they can
default on the loan (not pay it) and it can be foreclosed upon and you would be forced to move out.
We therefore only recommend that prospective buyers look at "Owner Financing" or "Contract for Deed" when they are not able to get normal financing - as the deed does get transferred over to the buyer, the taxes are much lower, they can contract to have work done or financed to the house. A home that cannot pass the appraisal process that is required of normal home loans would have to be done via Owner Financing or Contract for Deed. Be sure to be well advised before you take this step ... seek the help of a Realtor who has been in the business for a long time!
