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problems of lease to own by anon on January 11, 2011 @15:12

                              
I may have a new renter, but they are asking me if I am willing to lease to own and I am not sure what the issues are with this idea. I would be willing to sell at the right price.
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Re: problems of lease to own by Bryan (Ia) on January 11, 2011 @15:57 [ Reply ]
Lease to own, rent to own, selling on contract....as far as I know these are all the same animal. You act as the bank. You give up title and only have a lien on the property. In the event of default you have to foreclose. You current mortgage, if any, would normally come due in full upon the xfer of the deed. That is off the top of my head and may not be fully correct.

There is a form available to LPA members that is lease with a purchase option. It is a standard lease with a purchase option clause that must be executed by a certain date to be effective or that option expires. The T is responsible for securing their own financing.

Re: problems of lease to own by Jake on January 11, 2011 @16:40 [ Reply ]
From time to time you will get a tenant with the fantasy that they can buy a home by simply paying rent. I have never known one of any of these tenants to actually acquire a home in this manner. They do not have credit for conventional loans and their lives and employment are so unstable that they can not make long term payments anyway. But if you have a place you are eager to unload and no institution will make a loan on it this may be the way to go. Jack the price up, charge 10% interest and get at least 10,000 down. Make out a contract to sale that does not give any vested interest until the sale price is paid off. Make sure they pay the taxes and carry mortgage insurance.
Re: problems of lease to own by Anonymous on January 11, 2011 @16:50 [ Reply ]
I have read other versions of this type of contract. The LL leases the property for say, two years. If the tenants make their payments 100% on time for two years they then have the option to buy the house at whatever price is established by both parties. During this two years the title and deed to the house stay in the LL's name. The tenants must also put up a substantial fee up front like a SD. It is up to the tenants to qualify and obtain financing at the end of the 2 years. IMO it is better to keep the two issues (rent vs buy) seperate as it can get messy with such a contract. I have spoken to prospective tenants who try to confuse the issue and give the impression they have more money or credit than in reality by telling me they want to buy the house under such a contract. Are you renting the house (yes) or selling it (no). If you are selling it don't list it as for rent, list it for sale and deal with prospects as buyers

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