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EVERY WEEK, lots of people read this narrative. Read the following and then I ENCOURAGE you to call me to discuss your situation. I firmly believe rent-to-own is a MISTAKE and will NEVER recommend this to you in the Louisville market.
Your situation may not be as bad as you think. Call me and let's discuss.
Here we go with the narrative... Let me state UP FRONT that rent to own or lease/option is generally a BAD deal for the "Buyer" in the Louisville area. In 20 years of real estate work, I have NEVER KNOWN a purchase to actually happen. Let's explore why.
Rent to own is generally considered an "alternative mechanism" for getting a home sold. The sales market in the Louisville area has always been good enough to avoid "alternative mechanisms" (like rent to own, owner financing, etc.) in order for a Seller to dispose of their home.
When a "Buyer" enters into a rent-to-own situation, there are two compnents. FIRST, you have a lease - and it will generally NOT be at a bargain rate. You're going to pay full market rent or more.
SECONDLY, you sign a purchase option. The Buyer puts up an option fee of generally $2,000 to $5,000 - or more! A purchase price is stated which again is most likely not a bargan deal. If you ultimately exercise your option to purchase, a portion of your "rent" payments to date SHOULD be credited by the "Seller" against the purchase price - there is no guarantee of this.
If you don't exercise your option to purchase or you default on your payments, your large option fee is GONE - forfeited to the Seller. In fact, many of these Sellers HOPE you DO default. They'll take your down payment as a windfall profit and move on to re-sell the home to the next sucker. Of course, many Sellers will still let you stay in the house and pay the exhorbitant rent if you want.
Oh yeah, one more important thing about the home you're going to option - it's most likely a total "dog." Such a home is available on the "rent to own market" because it was either (1) Too crappy to sell in the regular resale market, or (2) Owned by someone who is more than happy to take advantage of you.
Okay, now WHY would a Buyer actually seek this type of situation? The following is not meant to be insulting or insensitive to anyone's particular situation - I am being BLUNT in order to keep you from making a mistake. Generally these Buyers have poor credit (they can't get a normal loan) and/or have no down payment to get a normal market loan. I've never understood how a Buyer has no money for a down payment or closing costs under a normal loan situation but can come up with money to potentially forfeit under a rent-to-own - THAT has never made sense to me. If these Buyers KNEW they were about to put their future in the meat grinder, they wouldn't do it - or at least I hope they wouldn't.
Let's summarize this environment - the Buyer has bad credit, is financially unsophisticated, and desperate for someone to "give them a chance." They're so desperate, they'll trust anyone who sounds like they can solve their problem. On the other side, the Seller is very savvy, has a potentially crappy home they can't otherwise dispose of, wants a lot of upfront money from someone who can't afford to give it, and actually doesn't care if the Buyer ever exercises their option or not.
Sounds like a recipe for disaster - doesn't it? It IS for the Buyer!!
Don't go down this road. I'm trying to help you here. You're better off to get your credit and financial situations straightened out and THEN buy a home through the normal channels. Don't be desperate. If you can't BUY a home, then it is simply safer for you to RENT something (home or apartment) and stay away from rent-to-own situations.
If you'd like to discuss this further, contact me and I'll be happy to meet with you. I will be happy to discuss your situation and see if you can purchase through the normal channels.
CLICK HERE to send Keith an email or call 502-992-4186.