If you are looking to rent to own a home, here are some tips to get you started.

The first step: Get Prequailified...

It is a good idea as the first step, to get prequailified. Meet with a local and trusted bank or mortgage company. Stay away from internet lenders. You need to find out how long it will take you to get a mortgage so you know how long of a lease your need. As well as what you will need to do to be quailified by the time that lease is up. You can get prequailified at no cost at most trusted lenders.

Then you need to know what price range you will be able to purchase in. you do not want to lease a home out of your price range as you may never be able to purchase it.

Second step: Look at properties within your price range...

You may not have the resources to find the properties that are not being offered as lease purchase already. Your next step should be to work with a buyer broker in the area you are looking, they can search rental listings and ask the owners or listings agents on your behalf if they would be willing to complete a lease purchase. A buyer broker gets paid when the lease is consumated and then a commission when the sale closes, they should not charge you anything else for their service.

As rentals are at a low right now, the other place to look is houses on the market for sale that are not selling. Your agent could contact the listings for sale to see if they are in a position to lease purchase the property.

Third step: negotiate the lease and purchase...

Once you find the property you need to negotiate both the lease and the purchase part. First the lease, make sure the lease is as long as the time the bank told you  that you need to get a mortgage. Make sure the monthly rent is at or below market rent, dont overpay.

For the purchase you want to negotiate your price, make sure your agent lets you know what the house is worth in todays market. For the option part some sellers will want a deposit for the purchase. you will want to make sure they are crediting to you part of the monthly rent you are paying towards your down payment and closing costs. Shoot for 8% of the purchase price divided by how many months you are renting. 5% covers your down payment and 3% covers your closing costs. Now if you do not purchase, you do not get any money back or any credit.

Now that you have some knowledge and direction, you can go forth and look for your dream home.

A note to HOME SELLERS:

IF YOU ARE A SELLER who is considering offering a lease purchase, make sure you outline the lease and the purchase seperately. You should state in the contract what happens if they do or do not purchase, and if they do not purchase, how much notice do they need to give you and do they get their deposit for the purchase back.

UPDATED April 11, 2011

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4 Comments on The TOP 3 Tips to help you to Rent to Own a home

APR
11
2011
876,517 Points 10 Featured Posts Attended Rain Camp Called Shot Master

Scott, I came here to learn the tricks...lol

Anyways, I do use additional clauses and depending on the length of the 'lease', deposit etc vary. Of course, this is done in the beginning - before the lease starts.
9:24am • #1
163,620 Points 3 Featured Posts Called Shot Master

Sometimes rent to own arrangments are more like rent to not be able to own.  Sometimes the contracted buy price is too high to be able to appraise for that. Or the renters might not be able to qualify for a loan within the time frame spelled out in the contract.  So renters interested in a rent to buy should tread very carefully.  Paying a high initial deposit and higher-than-market rent could be money down the drain.  With interest rates quite low, an outright purchase might make more sense than a rent to own arrangement.
9:48am • #2
APR
13
2011
702,236 Points 55 Featured Posts Outside Blog Called Shot Master

Dan that does haoppen quite frequently, unfortanately the biggest factor is a buyer who has no siavings and needs that time to save or build the creidt through a rent to own, they do need to be prequailified and know for certain they can get a loan in a specific amount of time and what they have to do to accomplish it.
8:55am • #3
702,236 Points 55 Featured Posts Outside Blog Called Shot Master

Praful it is important to add clauses that would not be in a regular lease or a conventional purchase. It is important to spell out what will happen, what needs to happen and what happens if they do not follow through with teh purchase part.
9:01am • #4


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Scott Godzyk, One of Manchester NH's Leading Agents

Manchester, NH

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Godzyk Real Estate Services

Address: pob 4783, Manchester, NH, 03108

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Scott Godzyk is the Owner/Broker of The Godzyk Real Estate Services located in Manchester NH. With 25 years of Real Estate experience Scott specializes in Listing and Selling Bank Owned Homes, Short Sales, Residential Properties, Condominiums, New Construction and Investment Properties. Scott services the counties of Hillsborough, Merrimack, Rockingham and Belknap. To contact Scott Godzyk please call 603-661-2121 or email sctprop@aol.com. his website is www.ScottSellsNH.com.


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