Milwaukee Journal Sentinel, Joanne Cleaver (09/22/2007)
MILWAUKEE – Sept. 25, 2007 – Sellers who can’t unload their
properties through a conventional sale are proposing rent-to-own deals
more frequently these days.
For sellers, the advantage of rent-to-own is the likelihood that the
renter will eventually permanently take the property off their hands.
For buyers, rent-to-own can provide the credit-challenged or
cash-strapped a route to homeownership.
But for buyers and sellers, there are also many potential drawbacks. If
your customers are considering a rent-to-own deal, here are some smart
questions they should consider.
For sellers:
• Who will tend to the property and pay for routine maintenance?
• Who pays for major repairs?
• What are the costs of setting up and managing an escrow account for
the portion of rent allotted to the downpayment?
• Will you manage the property yourself, or hire an agent?
• What if the renters change their minds? Who keeps the money in the
escrow account?
• If the buyers change their minds, what will be required to put the
property back on the market?
For buyers:
• How much of the rent is going to the downpayment?
• How locked in are you if change your mind? What will it cost you to
get out of the deal?
• How long will it take to accumulate enough of a downpayment that you
are likely to qualify for a mortgage?
• What happens if you don’t qualify for a mortgage by the specified
deadline? Can you continue to rent?
• Who will be responsible for routine maintenance?
• Who will pay for major repairs?
• Do you hope to strengthen your credit rating by paying rent on time?
If so, will the owner report your good habits to credit bureaus?
Source: Milwaukee Journal Sentinel, Joanne Cleaver (09/22/2007)
