A better understand of Rent to own .

[Ray Agosto]

Hello BiggerPockets forum , I need help understanding rent to own. I found a nice two bedroom cape cod style home that I would love to live in with my family. Only thing is my credit isn't the best and I am aware of the process to do a rent to own . Now I have couple questions about this method such as where would I be able to get a contract for this method with a optional purchase of home ? Also the home it self need some renovations such as new floor because he gutted it before hand? Would something like that be entitled into the contract the home he purchased for 85k and a rough estimate for a new floor is about 5-7k would that be put into the home selling price for me and I would also be putting what I believe is a leave option fee ? Also a known as a down payment for a traditional home buying method. Please anybody with answers to these questions can please help me that would be truly thankful.

[Wayne Brooks]

Kind of simple, if written up properly....use an attorney to draft your agreement.

You put up option money, maybe $3-$10k.

Your option money Should be applied to the purchase price when/if you actually buy it.

You rent the place with the Right to buy it within a certain/maximum amount of time.

To buy it, you will have to qualify for the mortgage and have any additional money that may be required for additional down payment and closing cost. And can not pay them off at closing. Also, seller could simply refuse to close/sell at that time and you’d have to sue to enforce it or get your money back.

If you don’t buy it within the set time frame you lose your option money.

This is Not a DIY arrangement.
One problem with this, since title remains in the sellers name, is if the seller gets additional liens/judgments/mtgs against the property