Comments on: Rent to Buy schemes …

By: Chino Hills Realtor

Chino Hills Realtor — Tue, 10 Nov 2009 01:37:56 +0000

Rent to own can be a really great plan if all the parties involved are above board and have the same win, win mentality. It is a must to do your homework before a buyer make such a commitment, do want to be paying someone’s mortgage when you think it yours.

By: Rent or buy? Rent to buy!- 7million7years

Rent or buy? Rent to buy!- 7million7years — Thu, 15 Oct 2009 08:46:28 +0000

[...] wants to know if he can turn his current rental into a Rent To Buy: Following your most excellent “Money Rules”, I have moved from a (rented) flat costing me ~33% [...]

By: Adrian

Adrian — Mon, 12 Oct 2009 09:42:25 +0000

@ Jim – It depends on what you can save the owner, since you are already renting the house?!

By: jimbomahoney

jimbomahoney — Mon, 12 Oct 2009 08:52:27 +0000

Hi Adrian,

(previously been posting as Jimbo I think, but now registered).

Following your most excellent “Money Rules”, I have moved from a (rented) flat costing me ~33% of my (net) monthly income to a small house costing 25% (net). (Of course, being a First Time Buyer, I’ll be breaking the 20% net worth rule to put down a deposit, especially given the level of deposit required to get a decent rate here in the UK).

The current owner seems enthusiastic about the option of selling it to me at some point, but I’d like to ask advice on what sort of ‘offer’ to make. i.e. what sort of contributions my rent payments would be / discount off the market value.

I’m thinking if we both have a valuation done, I offer 15% off the average of the two?

If it makes a difference, this is a relatively cheap home (~£110,000 = $190,000 AUD = $175,000 US).

(If it makes any more of a difference, I expect property prices to continue falling in the UK as the baby boom moves through to retirement – see an interesting paper here http://www.federalreserve.gov/pubs/ifdp/2005/847/IFDP847.pdf – plugging in the latest UK demographics indicates house prices bottoming out ~ 2018 and previous booms match with 77% correlation^2).

Jimbo

By: Cheapskate Sandy

Cheapskate Sandy — Tue, 06 Oct 2009 18:26:19 +0000

My aunt fell victim to a real estate scheme and I didn’t find out about it until it was way too late. Talk to the elderly people in your family on a regular basis to find out what’s going on with them because it is very easy for them to be a victim of these lowlifes without you knowing it.

By: Adrian

Adrian — Wed, 23 Sep 2009 05:40:45 +0000

@ Rick – hold the ‘deposit credits’ in escrow … I like it! Thanks for the suggestion

By: Jacob

Jacob — Tue, 22 Sep 2009 14:00:45 +0000

But, if you call yourself a bank, you can inflate the appraisal from $250k to $380k, find some poor sap who doesn’t have a chance in hades to afford the home and give him a 12-month interest only loan for the princly deal of $5,000 in closing costs and then take the home from him 12 months later in foreclosure. And that’s all legal! Go figure.

By: Rick Francis

Rick Francis — Tue, 22 Sep 2009 13:01:12 +0000

Adrian,

The thing that struck me was:
>the rogues go broke or their companies collapse (as many do)

I find it pretty amazing that the rogues often go broke charging double rent and putting an extra $100K built into their selling price. Of course they are rogues so they probably are stealing from their own companies too.

I thought there must be a money making opportunity if one wasn’t trying to run a scam. I liked your plan- one suggestion the deposit fund should be held by a third party so that there is a better assurance for the renter that if you go broke they can get their deposit back.

-Rick Francis