Mamma always said “If it sounds too good to be true . . .” Besides I live in Florida and Rich folks, esp. landlords can pretty much get away with whatever they want so I don’t trust them as far as I can throw them. But I have to live somewhere!
So how does it work?
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Its not necessarily a scam but it is expensive and would take forever to fully buy a home this way. Your monthly payment will be higher than if you rented. All the money that would have gone to rent still does they have a different name for it though – something fee I think. Then you pay more, about 15-20% of what you paid for the fee, that goes to principal. Its really more like you are forcing yourself to save up a downpayment, and it is for that particular house. because what eventually happens is when you finally build enough equity you take a loan out to buy the house for real, your equity covers however much it can. So say you paid 300 extra a month for 4 years you will have put in 14,400 in equity, so they will take that off the price of the house, and if the equity is enough (10-20% of house value, depends on credit) then you won’t need a downpayment but will still need closing costs.
My advice – you’re better off saving the money yourself (use auto deposit to force yourself if you have to) and then buy whatever house you want in the same amount of time.
It is also called contract for deed.I bought my home this way and it worked out great for myself and the seller. We agreed on all the terms of the deal and had papers drawn up and notarized. You will get a home that you may otherwise not be able to get. The seller in my case was a landlord that was getting to old to maintain the houses they owned and needed to retire. They got to make a few extra dollars for retirement and I got a good house at a decent price. Make sure EVERYTHING is in writing and signed and notarized. Find a landlord you know and trust,there are many good ones out there. Remember they are putting their future in your hands as well. They are trusting you to pay it off and maintain it. Make sure you keep every single reciept. At the end the reciept is just like cash,it proves that you paid. Good luck. PS I just read what another person had to say about institution rent to own. I bought from a private individual,and we made a deal on our own terms. I would not recomend doing this kind of purchase with a business. The seller chose me because I had paid rent on time for several years. I agreed because they were ALWAYS very honest and decent with me.
yes! In the long run you end up paying more then if you had purchased your own home. but if you cannot afford to buy directly then thats the best way to go-this way you know you did not waste your money and it’s going against a home you may own some day. check out all the legal stuff and yes your momma is a very smart lady ” If it sounds to good to be true.”
I do not live in USA so I am not familiar with the real estate companies there. In Canada some R.E. companies, working with the bank can get you a house with no money down. Inquire with several well established banks and real estare brokers to find out what is available. I also find it best to avoid rent-to-own retailers for the cost of borrowing is extream.
No it’s not a scam. This is a perfectly legitimate way to buy and sell real estate. In fact, it’s a great way for people who don’t have a down payment to get into a home. I’ve included a link to help you understand how Rent-to-Own contracts work. Hope this helps you out. And remember, as long as everything is in writing in a contract, and you and the landlord/seller agree then everything sould be fine. I would consult a lawyer for a consultation once you have the paperwork just to make sure you’re covered if you don’t feel comfortable. Hope that helps you out.
http://www.lease2purchase.com/whatis.php