How To Rent To Own in 2014
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I figured this would be only the most appropriate topic for the long overdue first blogging entry on our site. Its funny, it never dawned on me how many people actually read and follow blogs - I suppose I highly underestimated their popularity and effectiveness. Anyway, back to the subject at hand....
There are a few ways one could go about obtaining a rent-to-own home...One way is to find yourself in the fortunate happenstance of knowing or encountering an individual who, for one reason or another, is simply looking to do this type of transaction independently on the open market as opposed to selling the property on their own. These are extremely rare instances, and usually involve a hefty down payment/deposit, along with a binding contract penalizing you if you were to back out. This is less than ideal, especially as compared to what WE do.
Another instance you may happen upon this circumstance is in a mobile home community. Mobile homes, most commonly, are quite sturdily anchored in mobile home parks, where the owner OWNS the mobile home, but RENTS the plot of land it is located on. This can be somewhat precarious when it comes time to move. If a mobile home owner fails to find a buyer for their trailer by the time he/she absolutely HAS to be out and situated in their new location, they are stuck paying the space rent for this unused mobile home in addition to the housing expenses in their new location - essentially paying 2 rents for living in one home. Unless, of course, they have an extra 10-30k laying around to move their home to a new location, however in most cases it would be more cost effective to just buy a new trailer. People caught in this conundrum are quite likely to get rid of that unneeded mobile home for dirt cheap - sometimes next to nothing (personally, the lowest figure I've heard was $50 and take over the space rent). These are gems, and definitely a good route to take for anyone who is interested in a mobile home - but far less common than the scenario I am about to explain to you.....
"Cheaper Than Paying Rent!"
Now, as I'm sure you are quite aware (who isn't?) our economy has been completely and utterly horrendous for the past decade or so...It is an unfortunate fact that, although we are allegedly recovering, foreclosures, tax lien repossessions, short-sales, and bankruptcies are still an all-too-common reality in our society, steadily converting the "haves" into the "have nots", if you will.. Well, you've heard the old adage "when life gives you lemons, make lemonade" right? Well in essence, that is precisely what we set out to do!
Homeowners who would participate in our program are individuals and families who for one reason or another - whether it be due to job loss, medical expenses, or any number of unforeseen occurrences, can no longer afford their monthly mortgage payments going forward. These are not necessarily homes that are upside down (owing more than they're worth) or overpriced payments (in most instances they're roughly $450-700/mo below rental market value for that property) - but if, for example, a person used to making $70k suddenly has to go on disability and is reduced to disability payments of $1800/mo while paying a $1700 mortgage payment, they would likely find themselves in some pretty hot water even though they had no problem not too long ago when they were pulling in the $70k.....
"in most instances they're roughly $450-700/mo below rental market value for that property"!
Under these circumstances, they would likely fall behind on payments, causing their credit score to rapidly decline, and ultimately (inevitably, if no other action is taken) find themselves in foreclosure, completely flat-lining their credit...Now a foreclosure (especially a brand new one) poses yet another horrifying obstacle for them in their quest for a new place to live. Due to the state of the economy and the mass influx of new renters (former homeowners), the rental market has become incredibly competitive....In the past, landlords would be looking high and low for renters, offering incredibly cheap move-in specials and incentives to try to draw in prospects and get their many vacant units filled....not so much the case nowadays. In recent years, a landlord simply has to place one 2-sentence ad on craigslist for an apartment for rent, and suddenly (often within less than an hour) he/she is inundated with more calls than they can follow up on from prospective renters inquiring about their unit - no special rate, no incentive. Bottom line, credit is king - and if they go into foreclosure they're toast. Not only would their fico score be demolished (The foreclosure process alone can bring a 780 FICO score all the way down to a 390 inside of 5 months with missed payments and the ultimate foreclosure itself), but due to the amount of payments one would have to miss in order to become foreclosed on, they are viewed even less favorably by potential landlords than would an applicant who was just evicted for non-payment of rent - and that's no easy feat. Bottom line - they're in deep and they can use some help!
This is where you come in: Perhaps you've been experiencing some of the same sort of challenges I described above - maybe you yourself just went through a foreclosure or short sale, or maybe you have had to file bankruptcy, had some late payments and are suffering for it credit-wise, or maybe you are just starting out, have NO credit and everyone seems to be afraid of being the first one to get screwed by an "unknown" individual with limited or no credit history to judge them by?
NO CREDIT CHECK - Bad Credit/No Credit OK - $0 Down Payment/Deposit!
If that's the case - CHEER UP!!! There is a solution! The homeowners I described earlier are clearly under time constraints. They want to avoid damaging their credit as much as possible so as to make their transition to renting possible (for one) and as smooth as possible...for that reason, they're not exactly going to be so picky about who moves in as long as they can demonstrate that they have the income to pay the payments. These homeowners are looking for someone ASAP - like yesterday - to either transfer title of ownership to and TAKE IT OFF THEIR HANDS or lease it out to with the OPTION to buy - of ten times they are open to both (of ten with the hope that you will fall in love with the house, either way you're covered as there would be NO consequences for not transferring ownership if you do the lease with option). Based on their circumstances and the fact that they would want to keep any potential deterrents to a minimum, they're not going to be asking you for a large deposit or down payments like you would have to fork out in any other situation......That can save you EASILY $1-3,000 off your move in expenses for a rental or unspoken tens of thousands for a regular purchase (especially for a first time buyer).....That amount of savings alone could inspire the most lethargic cynic in your life to a fit of cartwheels and singing! and I'm not even done yet - on average people that go through us end up taking over or covering a mortgage that is $450-700/mo LESS than they would pay for renting the same property at market value.(sometimes more than $700 less, rarely less than $450 less, lets face it, your landlord is looking to cover more than his mortgage payment when he collects rent from you each month, it's a highly profitable business). Now, on monthly payments alone, your first year, that would be a savings of $5400-$8400! Lets say rental market value of the 4bdrm 3ba home you occupy is 3k/mo.....typically that would mean you would have had to have paid that much in deposit as well - if you were renting.....so in a 12 month period, by going this route as opposed to a traditional rental, you would have saved between $8,400.00 and $11,400.00 in housing expenses...There are more people in this country than you might believe that do not even earn that much in a year working full time minimum wage - not exaggerating add it up folks those numbers are alarming! Imagine what you could with that unspent money? Maybe the kids CAN go to college and one of thee years you CAN take a real vacation as opposed to attempting to talk yourself into the idea of a "Stay cation" being just as good!
