If you are a regular reader reader of the Tallahassee Real Estate Blog, then you know that I am an advocate of using a lease purchase agreement (rent to own homes) and many other forms of creative financing for real estate. But just because that I advocate the use of this form for real estate acquisition does not mean that one can use it without careful due diligence.
Home buyers need to understand some risks of buying “rent to own homes” through a lease purchase agreement, and how they can mitigate these risks. Just last night I received a comment from a reader who recently found this out. KC wrote:
Here is our situation, we moved to the Tallahassee Real Estate Market from out of State. We signed a lease purchase agreement on a 4 bedroom 2 bath home for three years. That way we could get established here in Florida and make sure that it was the right move for us. We love it here!!! We received a letter from the owner of the property three days ago that due to the economy they are filing for bankruptcy and that the property was already in a foreclosure.
We were shocked beyond belief. We are looking for a new home as we have pets that are like our children so we can’t do the rental thing and we don’t want to live in a house that we can’t buy. We basically have lost all the money we have invested in this home as some of the lease payment went toward the price of the house and we paid a big down payment…. -KC
As you can see, “KC” got into a bad situation and lost her investment. This is a risk in any rent to own program, so my recommendation is to follow some basic safety tips to avoid this happening to you.