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“If I had a dollar for every time someone asked me if the Bank would do a Rent to Own on one of our REO Listings, I’d have a bunch of dollars!!”

Rent to Own Pitfalls & Stories

If you found this article via a search, I’m guessing you won’t be happy with what I’m about to tell you.

However, if you’re a Buyer, looking to do a Rent to Own, I’ll guarantee I’ll save you some money & angst and if you are a Seller/Landlord I may be able to help fend off potential future litigation – either way, its good info that anyone looking to do a Rent to Own should know.

Let’s start out with the premise; on the outside, Rent to Own sounds like it has promise for both Buyers & Sellers, right? I mean seriously, I get to “live” in your place, pay you “rent”, then sometime in the future I own it? (ohh wait, isn’t that the same as getting a mortgage and paying that mortgage off – rhetorical question?)

Rent to OwnObviously, the term “Rent to Own” is, and can be, interpreted in an infinite number of ways – and trust me, it is. This brings us to the core of the problem; Terminology! The terminology is wrong from the get-go. You can’t RENT a place, then sometime in the future, own it – there has to be a sale and transfer of title before the “OWN” part happens (most of the time) and if you are only paying someone fair-market-value for rent then the OWN part never materializes.

Now I know what you’re thinking; hey hey, how about if I pay fair-market-value for rent, then pay “something” over and above that amount every month thus building up a reserve I could use in the future as, say a down payment??

Great idea – FAULTY thinking!!

And here’s why (Sellers/Landlords pay attention here); we’ll use an example:…


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