Ken's Naperville Real Estate Blog : Rent to own? Thanks, but No Thanks!

Rent to own? Thanks, but No Thanks!

As a Naperville Realtor, I am often asked if there are any "rent to own" options available in or around Naperville....

Rent to Own Home           

The people looking for this rent to own option are usually down on their luck, have bad credit scores, and no cash in the bank.  They can't afford to buy, but they want to avoid the stigma of being a "renter".

My little family was all of the above a few years back.  Money was tight, and we found a nice home in a nice neighborhood.  My landlord offered us a rent to own option.  He was so generous, he was even going to finance it for us...

However, his interest rate was high, his suggested purchase price was top dollar, and the real estate market had not yet bottomed...

Today, we are back on our feet, and home prices and mortgage rates are both lower...

So if you are thinking of a "rent to own", my advice is this...

Don't do it.

Go rent the home you want.  Live there.  But don't sign a rent to own agreement.  Why?  Because you will pay higher rent than necessary, and the terms are always slanted to the landlord/owner of the home...

While renting, you can save up some money and work on your credit scores (a good mortgage broker can help with this).

There is absolutely no shame in renting.  And there are several advantages...

When the time is right and you are ready to buy, I assure you that there will be plenty of homes to choose from.

Ken

Comment balloon 4 commentsKen Tracy • November 18 2012 02:33PM

Comments

Another scenario I've ran into is seeing people renting lose their "rent toward downpayment" and deposit when the owner lets the house go into foreclosure.  Under no circumstances would i recommend someone to do a rent to own, or sell/rent via a rent to own

 

Posted by Daniel Sundberg (Crystal Springs Real Estate) over 5 years ago

Hi Daniel!  Thanks!  One of those silly hybrid transactions (short sales too!)...

Thanks again!

Ken

Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) over 5 years ago

Ken, I guess it sort of depends.  I bought my house this way many years ago.  We got a fabulous price (by the time we settled six months later, the house had appreciated by at least 10 percent).  I was a new real estate agent with a bunch of settlements on the books.  The seller gave a 10-month out settlement date, and we actually settled early.  In your case, it sounded like a bad deal.  But sometimes it can be a blessing.

Posted by Patricia Kennedy, Home in the Capital (RLAH Real Estate) over 5 years ago

Hi Patricia. I am glad it worked for you...

I haven't seen anyone helped by it in my career, which goes back to 2005.  Perhaps in periods of rampant price appreciation like you describe...

Thanks!

Ken

Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) over 5 years ago

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