What are the pros and cons of buying real estate “rent to own”?

crazygaykitty: What are the pros and cons of buying real estate “rent to own”?
I really want to get in on this market, but I don’t have a down payment yet and i need to work on my credit. Has anyone done this?

Answers and Views:

Answer by wizjp
Oner dies, defaults on mortgage and is foreclosed, refuses to transfer deed when complete, seller backs out, dies, walks away……

full on possibility for a grease fire without a good lawyer writing the agreement.

To the individual below; don’t DIY the agreement. I underwrote for a firm that looked at land contracts every day.90% of the problems came because the contract was poorly executed or written. This is not a DIY legal issue. Too many possibilities. Get a GOOD lawyer. Review his previous land contract experience before you agree to anything.

Answer by Dilbert
We have the opposite problem. We’re considering selling our house rent-to-own because it might be the only way we can sell it in this market.

From my point of view, my main concern if I were selling to you would be that you might change your mind and decide not to buy it after all, after we already moved to a distant state. Then we would have to travel back and start over.

To prevent that kind of setback, we might insist on a lot of money up front. But you don’t have it. So it seems like a big problem from both your point of view and mine.

On the other hand, what else can we do?

To the person who mentioned a lawyer writing the agreement, aren’t there already any standard agreements written by a lawyer and sold as forms to fill out? Or does everyone who does a rent-to-own have to have a lawyer write the contract for that specific deal and not use pre-written contracts?

Answer by timothy p
Dilbert is correct.

Something to consider, People willing to rent to own with no down payment are usually forced into this situation by financial difficulties. The odds of them defaulting on the mortgage go way up in these circumstances. That leaves the buyer with very little (if any) recourse.

Answer by Snarky’s Wife
There are no pros to rent to buy.

For one thing, if the original owner defaults on the loan and it is foreclosed upon, you have no recourse.

Second, if the original owner defaults on their insurance and something happens to the house, you have no recourse.

Third, if they are selling the house “rent to own” it is because it is in a bad neighborhood or they are over their head in loan-to-value…therefore CAN’T sell it to a normal buyer…they are looking for a turnip to come along and take it off their hands.

Fourth, these houses often need major repairs, of which you will sink your money into and if for some reason you can’t buy the house, you’re screwed.

There is no reason to get in on the market. Do the smart thing and put your money in savings. Trust me…a nice house will be available when you’re ready.