Rent-to-Own: How to Find Rent-to-Own Homes NOW While Rebuilding Your Credit. Wendy Patton
Читать онлайн книгу.
the introduction, you sneaky devil you, you’re in luck - you’ll get the answer too…
Seriously though, I have been doing rent-to-own deals for more than 25 years. That’s right, I was doing them before the bankers convinced all of the sellers that only buyers with conventional loans should get homes. Yes, I still did them while the banks were trying to fulfill their goal of eliminating all renters on the planet by digging themselves into the subprime pit of doom. Fortunately for me, I outlived a lot of these banks. Not only have I been doing rent-to-own transactions through all of this, but I’ve also been teaching others to do them as well. I have taught more than 20,000 people from all walks of life, and I can assure you that I wouldn’t still be teaching if it couldn’t be learned.
So if you’ve already bought this book, go ahead and get comfortable in your favorite chair, put your feet up and we’ll get started. If you haven’t bought the book yet, but you want to buy your next home, trust me, this book will come in VERY handy. In fact, given the current credit crunch, it just may be the only way you’ll get to buy your home right now. Go ahead and proceed to the cashier and fork over your credit card. You will not regret it!
To Your Success
Wendy Patton
PART 1: WHAT IS RENT-TO-OWN? HOW DOES IT WORK?
Chapter 1:
What is Rent-to-Own?
Before we can look at why we would want to buy a home and how to buy a home on a “rent-to-own” basis, we first need to understand what renting-to-own is. A rent-to-own can also be referred to as a “Lease with an Option to Buy,” a “Lease Option” or a “Lease to Own.” In this book we will call it a “Rent-to-Own”, but these words can be used interchangeably for the most part.
In a nutshell, a rent-to-own sale means the seller is allowing you, the future buyer, to live in the home for a while as a renter before you actually purchase the home from them.
In a rent-to-own transaction, before you move into the seller’s home as a renter, you and the seller would agree on the sale price and other terms. You would pay the seller a nonrefundable option fee. Both you and the seller would sign some paperwork covering the lease, the purchase and the option (which gives you the right to purchase the home at a later date) and in approximately one to three years, depending on your agreement, you have the option of purchasing the home.
I say you have the option of purchasing the home because it is important to understand that in a rent-to-own transaction you, as the buyer, are not obligated to purchase the home at the end of the rental period. The seller, however, is required to sell it to you should you choose to buy it. That sounds pretty good, doesn’t it?
In later chapters we will go into great detail about the whole process. Right now I just want you to have a foundation of understanding about renting-to-own. Let’s recap.
A rent-to-own transaction between you (the tenant-buyer) and a seller is comprised of paperwork and contracts, which include:
•A Sales Contract containing the price
•An Option Agreement which contains the time period and option fee amount
•A rental period agreement
What you need to remember is that even though you will be signing a Sales Contract, it remains your choice to purchase the home, not an obligation to buy it. You are, however, also guaranteed the right to buy it, if you wish to, and you are financially ready to qualify for the mortgage. An exclusive right to purchase is what your option fee provides for you.
Why Would I Need to do This Rent-to-Own thing?
This, of course, brings up two questions:
1.“Why in the world would the seller let me do this?”
2.“Why would I need to do this?”
If we take a look at the condition of our current housing market, we’ll find some answers.
The Realities of our Current Housing Market – Can You Say “Slump”?
Let’s face it; throughout much of the country, the real estate market is tough for sellers. Many areas went through a period of real estate insanity that will be looked back on as the “Boom” years. The Boom years gave us double-digit appreciation rates and home values soared in much of the country. Some areas were so crazy that the appreciation rates were as much as 40% or more in one year. In Miami, Florida, the median selling price of a home in January of 2003 was about $190,000. By January of 2007, the median selling price was $375,000! That’s about 100% appreciation in 4 years, or 25% per year.
Do you think that appreciation rates of 25% per year are realistic? I’m sure you have heard the saying, “What goes up, must come down.”
With home prices surging so rapidly, people were buying them like the Nintendo Wii for Christmas. It was a mad rush to buy. Buyers were frantic to be a part of it because they wanted to capitalize on that crazy appreciation themselves. Those fabulous Boom years were great for Realtors® and sellers; but tough on buyers. A real estate agent could get a listing and start putting the sign out front. Before he finished putting that sign in the ground, a buyer would drive up and start writing a deposit check – without even looking inside. Before that buyer could finish writing the check, another buyer would drive up and start writing a bigger deposit check for more than the asking price. A “For Sale” sign attracted buyers, almost like dogs when they hear the can opener!
If a buyer happened to buy early enough, he could take advantage of that great appreciation. If he bought at the top of his market, he had nowhere to go but down.
The simple fact of the matter is that the staggering appreciation rates that most areas experienced just weren’t sustainable. The real estate market in most areas has not settled back down to mere mortal levels; they’ve dropped below that. Home selling prices in Miami, Florida, between January of 2007 and May of 2008, dropped from a median price of $375,000 to $340,000. By September of 2008, the median selling price dropped to $275,000. That’s more than a $100,000 drop in just over 1½ years! It’s still going down as of the writing of this book.
Miami is more of an extreme case than most of the country, both going up and coming down, but it does serve as a good example of how things have changed. Markets have changed to heavily favor buyers. That’s why it’s such a good time to buy now. That’s why sellers need to find creative ways to sell their homes, like rent-to-own.
The problem for sellers is that qualified buyers have become scarce, just like dogs when they find out only a can of green beans was opened, and sellers are popping up everywhere. It seems like “For Sale” signs on the front lawns are now part of the landscaping that everyone plants when they put in their spring flowers.
It seems like these signs are everywhere…
...these signs are all too scarce!
“For Sale” signs seem to be lingering well after the spring flowers have wilted. Whether your market is like Miami and is plummeting or your local market is much more moderate, odds are it’s still much tougher for home sellers to sell now than it was just a couple of years ago. Most of the country is in a housing “slump”.
So you’re probably