Rent to own - Landlord Forum thread

Rent to own by Laura (PA) on June 4, 2012 @19:43

Hi all, I have been doing extensive research, but I can't seem to find the answer to this question-----is there any way to do a "rent-to-own" without being liable for any accidents on the property? If we were to agree to let our current tenants do this rent to own, and they were to get the homeowners ins., and agree to give us a check to pay the taxes, then would this be a viable option for us?? My only concern is the liability----I am all for getting rid of this property, and the tenants are all for trying to get financed every couple years---I am just desperately afraid that if someone got hurt on the property that I would be sued.....does anyone have any info for me?? I am in Pennsylvania. Thank you all so much!!!!! By the way---the only reason I am even considereing this is because the tenants that want to buy the place are the kind of tenants that are literally "sent from God"---they pay their rent on time or even before every month....they take care of all the little things themselves...like I said, they are basically a landlords dream....and they would be "excellent" neighbors!!! I just know there is a way to make this work, I just need HELP!!! Thank you to anyone that gives me advice!!!

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Re: Rent to own by Anonymous on June 4, 2012 @19:54	[ Reply ]

"Thank you to anyone that gives me advice!!!" Here is the very best advice you can get. Do not even set one foot on that rent to own path. If you do, liability will be the very least of your problems.

Re: Rent to own by Nicole (PA) on June 4, 2012 @20:05	[ Reply ]

you continue on with your insurance - they continue on with renter's insurance - when they are ready to "buy" they get their own homneowner's policy and you are finished since they are paying you off.

Re: Rent to own by Anna Mouse on June 4, 2012 @20:45	[ Reply ]

If these tenants are so great why would you want to mess up a good deal? Rent to owns do not usually work out and then you have given away some of your rights. If I were you I would maybe right in a lease that they have first option to buy. Let them know you are interested in having them buy your property. However until the time comes that they can get financed you have been advised by council that a rent to own is a bad idea.

Re: Rent to own by Anonymous on June 4, 2012 @21:04	[ Reply ]

If they are a landlords dream, what is their FICO score? If they are so good why don't they just get a mortgage right now and buy your house? Oh, because they don't qualify for a mortgage, but maybe in twenty or twenty five years they will qualify for a mortgage! Don't allow a rent to own. It will not work out. Never let anyone else become responsible for funding your taxes. You said it yourself: you are desperate. You will need to worry about so much more than liability insurance. DON'T!

Re: Rent to own by Annie, CA on June 4, 2012 @21:46	[ Reply ]

All I can say is I purchased a property with a lease to own. We paid a larger amount of rent to contribute to the down. I made it into a rental. It was a great deal for me. The seller was not happy and took me to court. Since it was a binding contract, she had to live with it. It is probably not a good idea.

Re: Rent to own

Re: Rent to own by Eloise on June 4, 2012 @21:59	[ Reply ]

99% of the Landlords in this forum will advise you otherwise, I have been involved with a Lease to Own option and in my particular experience it did not work out for me because I ended up moving to another state, I would not be opposed to doing one for my property some day, considering the opportunity presented itself, I would personally hire a lawyer to draw up a lease as there are no black and white type of rules regarding these transactions as they are a mix of two things and can get very messy, expensive and complicated! BUT, to answer your question, the experience I have with rent to own went like this: - Set a "sale price". - Come up with a "down payment" - Deduct this down payment from your "sale price" - Write up a LEASE with the following: -$xxxx per month -$xxx additional per month, this moneys are applied also to the "sale price" at the end of the lease. {in this case, it was 2 years} If the renters for whatever reason do not purchase the property, this money becomes non-refundable. -There was a clause created regarding deadline for the renter/buyer to have or have approved financing for the property {sale price minus extra payments towards sale price}. -Until THAT date that they buy the house, YOU are the owner, they are the Tenants. So every responsibility you have as a landlord will continue to apply, including taxes, insurance, wear and tear items, maintenance issues etc, all you. Remember, you are the lawful owner of the property until transferred to their name, so you must have the proper legit insurance and your name is on the taxes, any defaults would be under your name, so, this is not something you want anyone else in control of. Well, hope that helped, in short, I'd contact a lawyer to draw up a lease with these items in it and I'd continue to pay for the taxes and insurance as until the sale date, you are the owner.

Re: Rent to own by Laura (PA) on June 4, 2012 @23:07	[ Reply ]

thanks everyone!!! Yes these tenants are really good, but they need a few more years to qualify for a loan....I kinda already knew what to do, and you all cemented it for me---NOT going to do the rent to own----property is already for sale, just wanted to see what the option was...Again, Thank you for all the advice!!!!

Re: Rent to own

Re: Rent to own by Bryan (Ia) on June 4, 2012 @23:31	[ Reply ]

The best advice is to rent with an option to buy. The forms are easily available here. If they cannot come up the financing in the option time, you are out nothing.

Re: Rent to own by Anonymous on June 5, 2012 @02:37	[ Reply ]

There is really no reason to do a rent to own in this situation. Just tell them when they can get a loan they can buy your house and you will let them know of any offers made so they can have a chance to match. You are not really getting rid of the house in rent to own.

Re: Rent to own by Lee Allen (Alabama) on June 5, 2012 @12:36	[ Reply ]

I do several "Rent to own" deals every year and have over the last 10 years. I have never had any problem with them. I use two forms one is an option and the other is the standard lease contract for my state. On the option I give the buyers 1-2 years to buy the house at a certain price. The tenant pays a non-refundable fee for this right (usually around $5000). Then I just charge them a monthly lease rate that is very similar to what they would have to pay if it was mortgaged. This is used to prove to the future lender that they can handle the payment. If lease rates for the house was $1000/mo and a mortgage would cost them $1200/mo then I lease the property to them for $1200/mo. Many people that lease option don't buy the property. It's not because they couldn't get a mortgage but normally from life changes. Often they want a house in another neighborhood more, have a job change, get a divorce, move out of state, have a baby and need a larger place, etc. If these people had bought a property they would most likely have to come up with $15k to sell a house they had only owned for 2 years or they would be stuck being a landlord until they could get the house sold.