Q. I have some, actually a lot of offers, of rent to own. I would like your feedback on these propositions. I am looking for a home. However my credit is bad. I do have a little cash though. Anyways, my main concern of this type of deal of course, is not being able to qualify after 18 months or 2 years. My other concern is who pays for maintenance? such as, roof, plumbing, etc. if this goes bad. What do you reccomend in this situation? and what do you suggest as a good read on this subject?

A. As a buyer, rent to own can be an effective way to get into a house. the key point to watch for is whether the rent to own terms you are being offered are reasonable, and will allow you to get qualified over time.  Some rent to own investors are only wanting to make as much money as possible, and will structure rent to own terms that will cost you so much, it is almost impossible to accumulate enough downpayment credit to get qualified.

They don't care about whether you can ever get the house or not, to some investors rent to own is merely a strategy for making more money off of their tenants. Be very cautious of the terms of any rent to own deal that is coming from an investor.

Terms should allow you to accumulate a reasonable amount of rent credit towards your down payment. For example, if you pay $1000 per month in rent, the more of that rent that is credited towards your downpayment, the better. 10% credit would be low, 25% would be pretty good. Investors will tend towards 10%, or even less.

Also, the fine print may say that if you miss a payment or are late, you are forfeiting your rent credit. Be sure you understand the terms in detail before you sign anything.
The other side of this coin is the private sellers who are not investors, but are merely trying to sell a house any way they can. They may allow you to rent to own if you can just cover their existing payments. Private sellers will often offer a better deal because they are motivated, and they are not "up" on all the rent to own stategies that investors use to get more money out of their tenants. My preference for you would be to find a motivated private owner who needs to get someone to cover their existing payments. The terms are likely to be much better. Private sellers are more likely to let you take over existing payments, without adding lots of rent on top of that.

You may want to schedule a flat fee, one hour consulting call with me, if you find a potentially good rent to own, or "subject-to" the existing mortgage situation, that you want to make an offer on.

If you find a motivated seller, you will want to work with them to make it a win-win deal. Many private sellers are willing to work with someone who handles themselves with integrity and can be trusted to keep their end of the deal.

Some investors will do rent to own deals in good faith. As usual, it is up to you, the buyer, to check the terms thoroughly, and be sure you understand how the deal will work.