What are the benefits of rent to own to the buyer/seller? What are the negatives?
We are interested in a property that is technically a church but is zoned as residential. The realtor who showed us the property said it is not eligible for a home loan due to this and is a cash on only but cash only isn’t an option for us. The asking price is 2 1/2 years of income for my husband. We have paid half of the price in the last 4 1/2 years living where we currently live and our rent is considered cheap. 😬 so if a loan was an option, we could afford it but since it’s not we cannot. We do not at this time have the credit to get a personal loan. To make the church livable it would be need a shower or tub, but already had full kitchen and two bathrooms just no tub. And we woild need to put in a laundry room. We were debating contacting the realtor to see if the owner would consider rent to own but want to be sure that’s the route we want to take first.
Currently we live in a tiny 4 bedroom 2 bath, the church would be 8 bedrooms 2 bathrooms. We have a family of 5 every day, with two extras that stay with us on and off. We also intend to start fostering in a few years with the goal of adopting siblings through foster care. So at least 2 more kids will be joining us, and as I told my husband today, my desire is to take in the largest set of siblings seeking a home as sadly i know siblings tend to be split up when it comes to adoption 😭 so 8 bedrooms would be like heaven for us.
It’s also been a weird wish of mine. I keep telling my husband I want to buy a church and remodel it into a home and then this comes up!
Oh and to add, it has been on the market 6 months.
Update: actually found out its been for sale for 2 1/2 years! Churches aren’t exactly in high demand aroind here apparently. We would pursue owner finance instead of rent to own, I didn’t realize there was a difference. There is a lot more to look into before we make a decision, but the info is very helpful. Thanks all 🙂
Our first home was seller financed, known as a Lease Purchase Agreement in PA. Also known as lease with the option to buy. It was the early 80s when mortgage interest rates were 15%. We could not afford that but found a seller who agreed to LP for 7%. There were no closing costs because no title is transferred. But the agreement was recorded with the county. Another plus, when it came time to move our buyer had to share the closing costs with the owner, we paid just the realtor commission. This was a win win transaction for us.
You have to get the details of that kind of arrangement specific and in writing. They can work but it’s easy to get screwed too. Definitely worth a lawyer to help with the contract if you go that route.
Rent to own can benefit a buyer who cannot get financing and a seller whose property cannot be bank financed.
BEWARE that RTO is often a scam to take a down payment/deposit from a buyer. Read the fine print.
I STRONGLY suggest, based on anecdotal experience, structuring as an owner carry. Especially if you will be required to make a down payment above or beyond a regular security deposit.
(Owner carries are closed, recorded with the county and are based on a promissory note/deed… RTOs are based on a lease.)
Presumably other changes need to be made, kitchen, second bathroom for that many, living room etc. Owning means also having cost of maintenance and repair, so consider these extras if you want o own. Might be better to find a house already set up.
I would strongly recommend against renting to own. If the church is zoned residential, traditional financing should be available as long as there’s a kitchen and at least one bathroom (a bathtub is not a requirement). The prior history as a church wouldn’t preclude obtaining a mortgage, as long as current zoning complies. If there’s a legitimate reason why you can’t mortgage the property, I would pass. You won’t be able to refinance and would have to sell for all cash, dramatically limiting your options.
Not saying rent to own never works but I’ve never saw one work out well. Owner financing is different and can be an option with a strong legal contract but a lender would be first option. If they pushing rent to own over owner financing I would walk away
It’s such a cool idea as most old churches around here just get demolished because conversion is much too expensive to comply to safety and energy codes. The scenario of renting it I can’t see working because all of the work would have to be completely done and signed off prior to occupancy. Egress, electrical, plumbing, heating, everything would have to be updated. AND I’m not sure if anyone else brought this up but Lead Paint and asbestos removal or abatement? Very expensive, very common in older buildings, and if anyone god forbid got sick, the owner would be on the hook so liability and insurance coverage would be other mayor blocks in your road. Cool products like this require cash and lots of it.
if there is a grave yard at the church, I would pass. Instead of rent to own try seller financing. If a church currently owns it and not a flipper they might go for it.
I know someone who did rent to own once her credit got good enough she applied for a loan to buy the house maybe try that
On a rent to own you build no equity in the property till the last payment is paid. You can pay every payment on time and pay every payment you never own it or build any value in it till the last payment is paid. It is the worse arangment you can make.
Realtors are not lenders. I would show this listing to several mortgage lenders and see what they say before trying anything else. If it’s zoned residential and you plan to live there, theoretically you should be able to get a mortgage loan.
Sounds like a scam. The realtor should not be providing financial advice. Talk to your bank or better still a local credit union.
I would check with an attorney. If the owner ends up taking a loan on the house and lien gets added, where does that put you?
Rent to own is very risky. Most put it in the contracts that they can sell it at any time. I have known this to happen to a few couples. They had paid a large down payment, and made payments for years, all to get a letter saying they have 30 days to vacate the home.
rent to own is very risky. if anything should happen to the seller during the terms of the agreement the heirs could just sell it out from under you and you would lose the money paid into it.
It requires an airtight contract that your attorney should draw up. Be very cautious
Don’t do rent to own – buy it now and have the owner hold the mortgage. Hire a real estate attorney. You need to make sure there are no current liens on the property, need to plan for what happens to the debt if you pass away or the owner passes away.
Don’t take it personally but I don’t think your ready to buy a house you said you have no down payment and all the stuff you need to do to make it livable is not going to be cheap are you going to be able to afford
I would button down save your money then start looking when you have everything in order
Owning a home is not cheap your responsible for anything the breaks not like when your renting