Buy here pay here homes, sometimes called rent to own homes or buy here pay here car lots, have long been a popular alternative for first time home buyers and investors. While they are convenient and usually not as expensive as traditional real estate transactions, there are several things that can go wrong with them. While the entire concept may seem ideal, it can also be very financially draining. Knowing the “what’s the catch” of this industry is necessary to prevent serious financial problems in the future.
Buy here pay here properties are those that are financed through a bank or other lending institution and then leased by the seller to the buyer. The majority of these properties are sold at a significant discount to the market value, allowing more money to be put back in the family’s pocket. The problem with rent-to-own homes is that the seller retains possession and ownership of the property. When the time comes to sell the home, there often is nothing left for the buyer to purchase. This can be a catch for both parties involved.
One common issue is that the seller may be trying to sell the home quickly in order to get out from under the mortgage before the end of the rental agreement. While doing so is perfectly legal, banks and lending institutions frown on selling a home this way. They will most likely require a high down payment and other financial guidelines such as a long waiting period before the deed can be transferred. While the buyer might be willing to go this route, it can be difficult and expensive and still leave them holding the bag for the final price.
Another common issue is that the renter will eventually be unable to keep up the payments and will be forced to move out. The reasons for this vary widely. Some renters need more money to cover living expenses while they are making their monthly rent payments. Others simply don’t have the money to keep up the payments. Regardless of the reason, many times, the property owner has no obligation to buy out the contract until the full amount owed is paid off – at which point, the renter has no option but to move out and find a new place to live.
Rent to own homes are often not the best option when first thinking about purchasing real estate. However, the reality is that buying and selling real estate can be very profitable, especially through real estate foreclosures. Many times owners who are having trouble selling their property opt to sell through a rent to own program. This gives them the opportunity to make some fast cash, without taking the worry of responsibility or obligations.
Real estate foreclosures are excellent opportunities for those who are interested in making fast money. If you are looking for a way to make money quickly through the purchase and sale of real estate, it may be a good idea to think about rent-to-own homes. Although it is true that there are no guarantees with real estate foreclosures, it is definitely worth at least trying. Even though it may be risky, it could prove to be very profitable in the long run. The most important thing is to make sure that you do your research before investing in real estate foreclosure.