Find Legitimate Rent to Own House Properties
You see beautiful houses listed on Craigslist, real estate sites and rental websites, and the sellers are talking about how rent to own properties allow you to save for a down payment or build equity while you're renting, instead of throwing all your money away on a rental. Unfortunately, many scammers use rent to own properties to attract people who need to find a property when they have bad credit ratings or who want to purchase a house but don't have a down payment. It's hard to sift through rent to own housing options to find legitimate ones, but getting a lease option is a great way to own a home even if you have encountered credit difficulties in the past and want to move toward home ownership.
Read Rent to Own Housing Listings Carefully
As the housing market remains stagnant, rent to own options are becoming more popular. Homeowners may wish to upgrade to a new, larger home, but they are sitting on their current property that won't move on the housing market. Rent to own allows them to bring in a potential buyer, cover the mortgage for that property, and allow them to buy a new home. When you look at a rent to own home listing to determine whether a homeowner or real estate company legitimately posted it or a scam, look for a few key items.
The first thing to look for is interior photos. If the only picture the poster provides is an exterior photo, chances are they're trying to add your email to a spam list or fleece you for an application fee. A legitimate rent to own listing has interior and exterior photos, as well as a description of the house that matches the pictures.
Multiple contact options, especially a phone number, is a reassuring sign. Talk to the poster over the phone rather than email to see if they are knowledgeable about the property or if it seems like they're making things up as they go along. If the point of contact is a real estate agency, check their website to see if the property is actually listed as a rent to own property.
Discuss Lease Option Terms Thoroughly
Look over the lease option contract thoroughly to make sure it's valid. You want to know exactly how much the rental payment is, how much goes towards the down payment on the home, how soon you have to secure financing after you begin renting the house and what happens if you are unable to secure financing within that time period. You also need to know how the homeowner is managing the extra amount that goes to the down payment. Make sure this is in an escrow account or another account separate from the main rental payment.
Look through the contract to understand what happens if you're late on a rental payment. Some unscrupulous rent to own scammers will take the entire extra payment account and not return it to you if you are late on a rental payment, along with evicting you from the residence. Understand the provisions that are in place to protect the escrow account. This rent to own property contract should also have the selling price of the property listed. If possible, have a lawyer look over the lease option contract.
Meticulously Inspect the Rent to Own Property
You don't want to take possession of a rent to own property and realize it's in much worse shape than you thought. Have a house inspector come through and examine the walls, mechanical systems and other areas of the home to make sure that you're getting exactly what you expected. Since you are paying higher than normal rent on the property to account for the lease option portion of it, you don't want to get stuck in a house that's going to fall apart on you once you purchase it.