How to Find Rent-To-Own Properties

It's important to understand the terms and obligations of a rent-to-own agreement.

A rent-to-own, or lease-purchase agreement, allows renters to lock in a purchase price for a home that they rent for a specified amount of time. During the time they are in the home, a portion of the rent they pay will go toward a down payment to buy the house at the end of the contract. Locking in a purchase price on property that increases in value over time builds equity in the home; that equity will be available to the new owner.

Instructions

1. Prepare a notebook or spreadsheet to keep track of all of the properties you will find. Organize your list, including information such as what source you used to find the properties, the sales price, contact information and notes about the property. The more detailed your notes, the easier it will be for your to narrow down your choices.

2. Search through the real estate classifieds of local newspapers. Look for advertisements that include phrases like "reduced sales price" or "distressed seller" with the listings. These kinds of statements indicate a homeowner who might be desperate to rid himself of the property. Homeowners won't always advertise their willingness to enter into a lease-purchase agreement, but suggest the idea to them; it's possible they hadn't considered the option.

3. Search through free sites such as craigslist.com. When you find a home that meets your initial criteria, such as location, number of rooms or building style, collect all of the information you can about the property and put it in your notebook or spreadsheet.

4. Drive or walk through neighborhoods that you would like to live in and look for FSBO (For Sale By Owner) signs. Even if the owner isn't advertising rent to own, he might be open to this, especially if the home's been on the market for a long time. If the area you are interested in has been experiencing growth, consider negotiating the purchase price when you sign the rent-to-own agreement. This could mean that when you purchase it at the end of the contract, your equity could go up because of an increase in property values.

5. Contact a real-estate agent or listing agent who deals with rentals. Ask her if she can help you find something. Many times agents know of homes that have not been put on the market yet.

References

• Bankrate; How Can You Buy The House You're Renting?; Steve McLinden
• The Mortgage Professor's Website; Lease-to-Own House Purchases; 2009

Resources

• Bankrate; Rent-To-Own Can Be Road To Ruin; Steve McLinden; 2005
• Rent to Own Secrets: Structuring A Rent To Own Deal