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⛔️✘✘✘ ⇨ RENT TO OWN HOUSE HOW DOES IT WORK? ✅Rent To Own Homes Pros and Cons (RENT TO OWN EXPLAINED) - YouTube
Channel: Gigi Gaskaite
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rent-to-own what are the pros and cons
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and should you do it hi my name is Gigi
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I'm a real estate agent in South Florida
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welcome back to my channel if you new
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consider subscribing I'm very humbled to
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have you here I'm very very excited to
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talk about today's topic which is rent
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to own and the main pros and cons as a
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real estate agent I received so many
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calls almost every week people asking
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about rental options if I have any of
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them and if I can help them to find the
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rent to own homes so I hope this video
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might be very helpful to many of you and
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to answer your question should you do it
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or shouldn't you do it and why so let's
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start with pros first of all this quick
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process once you find your rent to own
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house you can move in right away there
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is no long process or waiting a month or
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two so it's it's very quick so that
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that's a good thing and then it gives
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you time if you need to fix your credit
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if you need to establish your job
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employment history you know you win some
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time because you eat whatever you agree
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with the owner it gives you 1 or 2 years
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until you ready to get your mortgage and
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meanwhile you can still kind of own at
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home and do your repairs if you want and
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then you also have you lock you lock in
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the price if you are agreed to buy a
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house in 2020 and then officially we'll
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take the title and become a homeowner of
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that house in 2022 you will pay the
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price that you agreed today in 2020 and
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in many places appreciation goes higher
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so when you buy in 2022 you might be
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able to get a very good house and in
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that day the appraisal it might appraise
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for way higher than you agreed to years
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ago now let's talk about some cons so
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first of all it's the deposit or option
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fee so before you move
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to your rental home owners will ask for
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deposit or option fee which typically
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goes from 1 to 10 percent of purchase
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price and at least in South Florida most
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of the time I see at least 10% so
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recently I saw a house that is worth 250
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K and the owner was asking for 25k to do
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the rental option and to deposit up
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front maybe sometimes you can treat to
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1% I would say typically typical is
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maybe 5% which is still a big amount
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it's as much or even more than your down
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payment if you will do FHA loans
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sometimes even conventional and the most
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important part it's non-refundable you
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will not get this money back if you
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won't buy the house now if you buy the
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house it will go to your purchase price
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but not many people end up buying the
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house and so many people end up losing
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their money and we will talk shortly
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wise and another call is conflict of
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interest so here's how it works so once
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you agree rent-to-own you kind of feel
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that your owner and the owner will push
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all maintenance on you so and you are
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allowed to do repair so you kind of home
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owner but officially the title is still
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on the previous owner so if things
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happen like a major expenses like you
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need to fix a/c and cost thousands of
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dollars and then you might have conflict
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with the owner even if your contract it
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says that you you are responsible for
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all the repairs but there are laws that
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protects you and the owner still might
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end up fixing a scene because of the
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other loss doesn't matter what it says
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in your contracts many those little
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things when it comes about home
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ownership it's difficult to decide it's
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which either you need to do it or the
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owner I'm talking about the taxes and
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violations and liens so it is a there
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might be lots of conflict of interest in
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this case and the most important part is
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the risk once you're doing rent
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there is a huge huge risk in typical
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home buying process before you buy the
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house and you close on the house you do
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a lot of work like inspection appraisal
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title search and mortgage pre-approval
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and in this case you skip all those
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steps so how do you know the title is
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clear maybe someone from the past owns
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it or there are some liens on the house
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and it has lots of violations it might
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have open permits it the house might be
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done not by the permits and you might
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never approve for a qualify for that
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mortgage that you must be approved by
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the end of your term and the house might
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never appraise for the price that you
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agreed so you will never get a loan from
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the house if house is not paid off and
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owner have a mortgage if he decides to
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stop any mortgage the house might go to
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foreclosure and bank might not honor
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your rental on the contract also we have
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a huge risk losing that big fat deposit
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that you left before even you moved to
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the house and if you talked with the
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other owners or investors and you asked
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them how often the people end up buying
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that house rent-to-own you'll be so
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surprised that like 90% of the time
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people never end up buying the homes and
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they end up losing their deposits so
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it's extremely extremely risky so it's
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very very important before go to any
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rent to own contract to talk with a real
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estate attorney I dealing with the one
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who already have experience with rent to
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own so they can advise you even with
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real estate agent or attorney they can
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help you to put some contingency like
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contingent on appraisal contingent on
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the clear title contingent on no
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violations
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and contingent maybe you know you being
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approved for that mortgage so it
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protects you and there are it's sad to
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say and this is actually true there are
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many many others who try to take
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advantage of the system and you know
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they won't be upset that if you will not
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be able to buy the house and you will
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lose your deposit that might be their
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main goal and reason why they doing
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rental options so it might be awesome
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idea and awesome deal if you do with the
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right people with the right team you do
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your own homework you might do your
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inspection or appraisal even before I go
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to rent-to-own option this might be
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ideally and it might go really bad and
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horrible if you do it with the wrong
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people
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it might go really bad and you're taking
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a lot of risk in this case also there
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are not so many houses to choose from
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who do rental options so you your end up
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with very limited options versus if
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you're planning to buy a house in
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regular way there's so many houses you
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can choose from also most owners will
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take advantage of the rental system and
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they will charge you an extra for that
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and premium for that house you're about
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to pay which is worth way less or if you
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be pre-approved for a mortgage for the
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same amount you might get a bigger house
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a little bit better location or even a
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little bit more updates most owners
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don't do it because they have a good
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heart and they want to help you even
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though they try to recommend you a good
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credit repair company or mortgage lender
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that at the end of the day their main
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goal is to keep that big deposit and
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then after you move out they'll find
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another family with the same with the
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same strategy with the same idea another
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very important fact usually when you buy
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a house owners are motivated to sell it
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so if there is open violations our owner
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need to fix something so it passed the
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inspection or appraisal they are willing
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to do that because they want to sell the
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house now in your rent
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on agreement on erm I don't care because
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they already got their deposit so they
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don't care if you end up buying a house
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or not and they might even benefit more
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if you wanna die buying the house if you
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last owner to fix something so to be
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approved for appraisal or for a loan or
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to fix those violations they might don't
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care they might don't do it so if you
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have a chance to do a regular way it's
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way way more safe for you and you will
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end up getting a better price and having
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more options to choose from
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that's my opinion and it might be a very
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good deal if you find a very good people
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to do this and you do your homework so
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just think about it and do your homework
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before especially with real estate
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attorney who knows what they do and how
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to type up the contract to protect you
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thank you for watching I hope you
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enjoyed this video if you have any other
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questions please leave them in the
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comments below I will be happy to answer
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them thank you so much and have a
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wonderful day bye
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