Rent to own in Houston is a perfect solution in a soft real estate market for someone wanting to buy a house.
A Typical Rent to Own Scenario
Let us start with a seller who knows he or she wants to sell a property they are no longer living in. They also realize the market just took a hit (ie. Harvey) and they know in a year or two the prices will go back up.
Said seller, we’ll call him John, says to himself, “Wouldn’t it be great if I could have someone in the house right now paying the bills and in two to five year buy my house and I don’t have to worry about anything. Then I can move in with my daughter and fish with my grandson.”
Well, John, you can. It’s called rent-to-own.
Now that is the seller’s side. But what about the buyer? Here is how they would look at it.
Enter our buyer, Sally.
She has wanted to buy a house for a long time. But Sally is thinking, “My divorce cost so much in court fees and has damaged my credit, I’d really love to get my daughter and me into a wonderful neighborhood. If I could find a way to rent till I have the money and credit built back up to buy the house it would be a lifesaver.
The Relationship of Need and Want
Sally meet John. This is the start of a beautiful rent to own relationship.
Both parties have a reason to not pull the trigger today. John’s is money; he wants more for his house. Sally has a strong desire to buy and has enough income to pay the monthly obligation, but other components of her financial situation don’t make her an ideal candidate for a traditional home mortgage.
The Rules of Rent to Own in Houston
The beautiful thing about rent to own rules is that they are completely negotiable. There are some standard components to follow. But the dollars are not set in stone by any template.
So Sally and John meet. Sally knows that homes in the area are selling today for $250,000. She can afford $1,300 monthly rent with her job and child support but she doesn’t have even a low 3.5% for a down payment. While she can’t come up with $8,750, she can get $3,500 for an option to purchase the house.
John is actually okay with this as long as he knows the rent and expenses are paid on the house and he will get $267,500 when the sale actually happens. This also helps that his mortgage is going down every payment.
Sally thinks about this, realizing she will save time and money on moving twice. Her daughter will be in the school she loves and Sally expects her job will promote her in six months giving her more to save toward the eventual purchase. Plus she and her daughter have a place to call their own.
Win-Win for Everyone
She is building equity before she even owns the property and gets to enjoy living there in the meantime, making it home. If for any reason during the option period, Sally feels she doesn’t want to live there, she can walk away from the deal. Of course, she can’t think of anything that would cause her to want to move away, but you never know and it’s nice to have the option.
John is happy because he knows he’ll get the property price he really wants. If the housing market booms in the next few years, growing 20 percent, he might kick himself. But this is the one gamble he takes. If Sally walks away from the option or can’t refinance, his expenses have been paid, he keeps the option money and sells the house.
Plus he likes Sally and her girl and hopes they have the same happiness and success that he and his family did in the home. Sometimes, it’s nice to pay it forward in a way that everyone wins.
If you need more information on the rent to own option of buying or selling,