S2 Ep22 - Rent To Own - a podcast by Brian Cook And Kindra Cox

On Season 2 Episode 22 of The Brian and Kindra Show, they discussed rent to own and leasing properties versus purchasing with cash or a traditional mortgage. 

A typical sales contract for most Realtors is between a seller and a buyer who will pay cash or obtain a loan.  A typical closing will fully fund the seller with the full contract price less closing costs.  However, there are situations where a seller might be agreeable to a lease to own or even an owner finance for their property.  

For a seller, a rent to own situation can be a risk. A seller assumes a certain amount of risk to allow a purchaser or tenant to move into their property.  Often in a lease to purchase contract, the purchase is expected to maintain general upkeep of the property.  The contract should be very specific, laying out terms and conditions for the owner and purchaser.  Things to look for include: Who pays county taxes, homeowner association dues, special assessments, etc.  Who is responsible for repair of the property?  Is any portion of the monthly payment to be applied toward the purchase price?  These are just a sampling of things that may be included in a lease to purchase contract.  

For buyers who have damaged or insufficient credit, a lease to purchase contract may be very attractive.  This option may allow them to move into a home they want to purchase, but still have time to repair or build their credit to allow them to obtain a secondary market mortgage.  These loans often have terms that are more enticing to a buyer although the process to obtain them may be more stringent than in an owner finance or lease to option situation.  

A common misconception that Brian and Kindra noted is that buyer often believe they won’t need a deposit with a rent to own.  Actually, the deposit may be even greater than in a traditional rent situation as the risk can be greater on the seller.  

Brian stresses that it is very important to review any contract well prior to signing. This seems particularly true in the event of a lease to purchase contract as there are so many variables.  

Brian and Kindra hope this information has been helpful to you. As always, if you have any questions or need help, please feel free to reach out to your local real estate professional

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