Comments on: Lease or Rent to Own Homes

By: Drumheller Real Estate

Drumheller Real Estate — Sat, 11 Jun 2011 03:39:24 +0000

I love the fact that you can make money from a property without being the owner. Great article and an excellent site. Cheers

By: Carrie

Carrie — Fri, 10 Jun 2011 03:26:32 +0000

both options have their own pros and cons. Leasing might feel like you’re throwing away money month after month but at least you don’t get the high rate increases from rent to own homes.

But with Rent-to-own homes, you get to own the property in a few years.

Decisions, decisions.

By: Nick

Nick — Wed, 08 Jun 2011 19:07:31 +0000

And the beauty is that you get the option for free. I love free options!

And why, you hit the nail on the head – the seller is not a transactional engineer.

By: maggie

maggie — Wed, 27 Apr 2011 09:06:40 +0000

Hi there! I agree with the statement that you only need to control the property to make money out of it. Managing the property well generates money.

By: JP

JP — Wed, 20 Apr 2011 09:46:29 +0000

Rent to own homes are better than only renting homes. You will be able to live in your home without having to pay the house in cash. You will also be able to avoid most foreclosures.

By: Augie

Augie — Mon, 11 Apr 2011 01:28:41 +0000

There are a number of ways you can accomplish this. If your friend is willing to do this for you; great. Another alternative is that you can have your friend buy the house from the seller and then either add you to the deed or sell it to you on an agreement for deed or an installment land contract. Will you be able to afford the new payments? You have to be able to protect your friend’s credit. You might also have your friend buy it and lease it to you until you are financially on your feet. Best of luck!

By: Tammy

Tammy — Thu, 31 Mar 2011 18:56:29 +0000

Im leasing to own a house,put 3,000 down, but husband passed and cant afford payments. question is I have a friend that wants to get a loan for the house and give me the money to buy the house from the owner, then sign over the house to her. is that possible??

By: Augie

Augie — Tue, 08 Mar 2011 14:59:07 +0000

We find lease options and RTO programs work well in many markets around the country and are a great alternative in the absence of market liquidity.

By: Augie

Augie — Tue, 16 Nov 2010 13:22:31 +0000

There is plenty of opportunity for everyone who wants to take advantage of it. I appreciate your comment. Thanks!

By: nick

nick — Thu, 28 Oct 2010 22:52:32 +0000

One option that I love and is becoming ever more popular with homeowners looking to unload their homes, especially in this market, is rent to own also known as lease to own or rent with an option to buy.
In the Mahopac market I have seen this as a win-win option for many people.

By: Jason

Jason — Thu, 28 Oct 2010 08:42:42 +0000

You have very relevant information here, Augie. And I admire how you provide such smart pieces of advice for your readers. Kudos to you!

By: Augie

Augie — Wed, 27 Oct 2010 06:08:41 +0000

That’s great…are you planning on adding to your portfolio? This is the perfect market.

By: Augie

Augie — Wed, 27 Oct 2010 05:59:22 +0000

Control vs ownership is an ongoing strategy discussion, especially in this market. I agree you don’t want to be dealing with banks…besides the lack of liquidity isn’t doing anything to revive the market. I believe it will be up to the creativity of the individual investor. Keep up the good work!

By: The Cottages on Government Way

The Cottages on Government Way — Thu, 21 Oct 2010 15:45:22 +0000

As soon as I landed my first job about about 10 years ago, my mom advised me to invest a portion of my earnings in real estate. She further advised that since I’m planing on getting my own place, I should ditch the idea of merely renting a home. Thus, blindly trailing my mom’s words, I opted for a rent-to-own arrangement with my first landlord. I recall that there were times when I almost regretted that decision — my monthly payments being considerably higher than those of my peers. However, fast forward to the present, and I’m really glad I listened to my mom. I now own that place — and currently earning money from it by renting it out.

By: new communities in post falls

new communities in post falls — Thu, 14 Oct 2010 07:56:34 +0000

Very informative post!

Personally, i prefer to go for rent to own contracts. This way, I feel like my money is actually going somewhere in which I’d prefer it to go … rather than just being helplessly contributing to the bank account of a land owner.

By: Augie

Augie — Tue, 31 Aug 2010 04:25:56 +0000

Sandwich options have been around for a long time and they help investors provide a valuable service along with an opportunity to earn a profit. Regardless of how you acquire or control property you must either buy with equity or be able to create it quickly.

To your success…

Augie

By: cinema bioskop

cinema bioskop — Mon, 23 Aug 2010 22:20:59 +0000

Thanks for your knowledge about technique sandwich option.
And I agree with you, about we must buy property below market price

By: new houses

new houses — Sun, 22 Aug 2010 16:47:12 +0000

Great article Augie and thanks for sharing your thoughts. It is important to find a realtor you can really trust. With the bad economy now, it’s scary how people will do anything to earn fast cash.

By: Augie

Augie — Sun, 22 Aug 2010 14:27:51 +0000

Hello Tom,

This s a lousy situation and I’d be angry beyond words. I’m not an attorney and I don’t give legal advice. Depending what state you reside in, the owner may have violated the law because the property was rented but the mortgage wasn’t paid. I would have asked the realtor about the quality of the owner and status of the underlying mortgage before entering the agreement. Now, I’d be asking for a refund of the commission they earned. Our normal process any time we work with a property where existing financing will remain in place is to obtain an estoppel letter form the lender confirming that the mortgage is not in arrears. While you may have recourse against the property owner, there may be nothing there to collect. You should also note that if the owner (or anyone else for that matter) brings the mortgage current, the foreclosure goes away.

You do have a couple of options. First, If the property is taken back by the bank they may have to honor your lease which means you get to stay as long as you pay the rent. I would talk with the bank on how to handle this, because some (not all) banks have a clause in their loan documents where the borrower agrees to an assignment of rents in the event the borrower defaults on their payments. Next, you might want to try to purchase the property via a short sale. It would probably be better for the bank to sell the property to a current tenant rather than let if go vacant and all the way through the foreclosure process. You may want to get the broker and owner in on this one. Again, depending on where you are located, there are attorney’s who may be willing and able to help you with this process. It might even be possible for you to take over the existing mortgage however, I’d encourage you to get competent counsel.

I have no idea of the value of the house, the amount of the current mortgage or how many payments the owner is behind. I am attempting to give you some ideas that may help you make the best of a difficult and frustrating situation. The good news is that you could still end up owning the home you and your family obviously want.

I wish you a successful outcome.

Augie

By: Augie

Augie — Sun, 22 Aug 2010 14:00:26 +0000

Thanks for the kind words, It is my blog so they are my thoughts. To date I’ve done all the writing. Honestly, I haven’t given guest writers much thought. Who knows what the future may bring?

Augie

By: tommankis@gmail.com

tommankis@gmail.com — Sat, 21 Aug 2010 21:04:26 +0000

I recently leased a home with an option to purchase. It was done through a respected realtor in the area. Three months later the Sherriff shows up and advises us the home is being forclosed and will be sold in an auction on Sept. 25, 2010. We spent a lot of money moving plus we painted the entire interior of the house. Thanks for your reply.

By: Find Motivated Sellers

Find Motivated Sellers — Thu, 19 Aug 2010 12:21:54 +0000

You are absolutely right you want to control the home with a lease option. Lease options are great because you can make money on the front-end, monthly and on the back end.

By: UK Replacement Certificates

UK Replacement Certificates — Sun, 11 Jul 2010 11:14:11 +0000

Augie is right even if he’s not an attorney. Very informative post. I thank to you for this useful information.

By: Augie

Augie — Fri, 16 Apr 2010 01:39:49 +0000

I write it all. Glad you like it.

By: olympic weight bench

olympic weight bench — Fri, 16 Apr 2010 00:54:15 +0000

Hey I was just wondering do you do all the writing yourself or do you have guest writers. I’m loving your blog. Thanks.

By: Augie

Augie — Sat, 05 Sep 2009 21:37:01 +0000

I don’t know what state you’re in but in many states if a property is sold, the lease and tenant go along with it. The new owner is legally bound to honor the lease and all the terms in it. The seller cannot force you out…it is against the law. He could offer to buy you out and then it is up to you whether or not to accept his offer. I would also want confirmation as to where my security is being held if I were you.

By: Augie

Augie — Sat, 05 Sep 2009 21:32:16 +0000

First let me say I’m not an attorney. Second, you may want to check with one. Now that’s out of the way, here’s what the federal foreclosure legislation has to say as I undersand it. If a tenant is foreclosed out of a property the lender has to honor the lease as long as the tenant is paying rent. Upon termination of the lease term, the tenant has to move. Your situation is a bit different because the landlord is not the owner. This is why I suggest an attorney, because logic (and hopefully, the law) would suggest that if the landlord is acting as a agent of the owner than the lease would still have to be honored in the foreclosure.

This could also present you with an awesome opportunity. You mght be able to buy the house as a short sale. As an owner occupant, you might even get the bank to financine you (rates are still really low). If you get it all done and closed before Dec. 1, you might even qualify for the Federal Stimulus money, $8,000 free cash. How’s that for making lemonade out of a bunch of lemons?

Good luck!

By: Naedj

Naedj — Tue, 01 Sep 2009 17:47:10 +0000

I have a lease on a property that my landlord doens’t own. House is listed as short salem\, am asked to leave. What can I do

By: Naedj

Naedj — Tue, 01 Sep 2009 17:44:44 +0000

I have a lease on a property that is owned by 2 people. One of the owners knew about it and did not inform me. Now the property is listed as short sale, am asked to vacate when it’s sold. Is there anything I can do

By: Naedj

Naedj — Tue, 01 Sep 2009 17:40:22 +0000

My landlord gave me a lease (expires march 2010) on a property that he doesn’t own. One of the owners knew about this act from the landlord and collected each month for the so call “landlord” who lived out of state. Now the property is listed as a short sale. The real owners are asking to leave by the time the short sale is over and purchased.
Is there anything I can do as tenant with this lease

By: Augie

Augie — Mon, 16 Mar 2009 21:37:34 +0000

Great question. How do you avoid making payments while looking for a tenant? The best way is to negotiate your deal such that payments begin once you have a tenant ready to move in. While it would be great to always have a tenant lined up before you acquire or control a property, it isn’t always possible. It is up to you to negotiate with the other party as to party what will and won’t work. Negotiate for mutual benefit. I usually start by offering to start making payments 3 months after we sign the paper work because in many cases the property is already vacant and they are making the payments anyway. Sometimes they balk, sometimes say only one month, or maybe two but it gives me some time to locate a good tenant without funding the monthly payment out of pocket. You can also ask for three and begin payments early (i.e. as soon as you find your tenant). If they ask, “Why the delay?” My response is that, “Rather than spending money on making payments, I’d rather invest in advertising, tenant screening and making the property spectacularly appealing!” That will serve both our interests.

The terms are always negotiable. Be flexible, be creative and be sure to solve the other guys problem (don’t make it your own) and you’ll find lease options and lease purchases to be excellent transactions. Maximum leverage with minimum risk!

By: paul

paul — Sun, 15 Mar 2009 01:47:44 +0000

What is the best way to avoid paying monthly payments on the property while looking for a sub leasor? Try to have people lined up to lease the property even before you lease it?

By: Augie

Augie — Mon, 19 Jan 2009 13:59:18 +0000

By your comment, it sounds like you already have an option to purchase the property. The first rule of dealing with homeowners in foreclosure is to know your state law regarding dealing with sellers in foreclosure. There may be local rules in your state which dictate what you can and cannot do. If there is no equity and the payments are more than market rent will cover, I’m not sure why anyone would want to exercise and option on that property. If it were me, I’d let it expire. At best, it might be a candidate for a short sale.

By: Julia

Julia — Sat, 17 Jan 2009 09:16:28 +0000

The owner is going in foreclosure by the end of this month. He bought the house for more then what it’s worth now. The payments are high. How can I excercise L/O in this case?