Rent to Own is a partnership between a Tenant and a Seller/Landlord.
Sellers can be Private Sellers (FSBOs) or Listed with Real estate Agents or Landlords fed up with Tenants and Toilets.
Here are reasons that the OWNERs want to consider a Rent to Own Tenant, especially in a Buyer's Market (where there are an oversupply of homes available and time to sell is over 180 days in some areas):
FSBOs (for sale by owners) want. . . .
- SPEED (fast closing)
- Top Price
- Little costs out of pocket
- NO AGENTS to pay a commission
SOLUTION: They get a BLANKET MORTGAGE (a single mortgage that covers more than 1 parcel of real estate).
- Their old home is now an investment property.
- Their bank will consider 75% (approx) of the rent to own income to go toward “ability to pay" income for the next home loan
- I instruct you to get market rent plus 10% to 30% more in a non-refundable option payment
- - now you can show the lender that 75% is a great number :)
LANDLORDs want. . . . . .
- LONG leases
- Top Rent
- Little costs out of pocket (maintenance)
- NO damage
- NO late payments
SOLUTION: Once the Tenant-Buyer learns of the PROBLEMS and CONCERNS the landlord has been experiencing, and show a win - win solution (long leases, paying for minor maintenance), this is great news for the landlord.
"LISTED WITH REAL ESTATE AGENT" SELLERS
These Listed Sellers want. . . .
- fast closing
- top price
- no funny buyers not getting financed at the last moment
- not paying for 2 properties (new home and home that has not sold yet)
SOLUTION: Many times they can get released from their contract by writing a letter requesting that the contract be canceled and any sale due to the owner's marketing will not result in a commission being paid to the agent. Or they can pay the commission to the agent when the house sells (in 12 to 36 months).
Next article will be- How does a Renter Find a “Rent to Own" Owner to help me own a home?
Brian Gibbons has assisted hundreds of Sellers, Landlords and Tenants successfully create Rent to Own Agreements since 1986.
He can be contacted through his blog at http://reiskills.typepad.com/depositbuilder/