What are the pros and cons of rent-to-own situations?
My boyfriend and I are looking to move into a house in Durham, NC (we currently live in an apartment in Durham), but we were planning on renting because we’ll only be in the area for a few more years. Specifically, we were trying to avoid all of the headaches that come along with home-ownership, as it doesn’t seem worth it for just three years.
However, we came across this property, which has a rent-to-own situation. I called the number and spoke to a guy who explained this particular situation to me. He said:
– First, we will need to pay a $199 membership fee, and we’ll be given a username and password through which we can view all of the properties. (If we do not end up choosing one of these homes within 90 days, we receive the money back.)
– We view homes of interest, select one, and move in. We then begin paying “the bank” a monthly rate, comparable to a rent rate. (There is no down payment.)
– We own the home and can sell it at any time.
– The guy searched for properties in my area, and there seem to be a lot.
– He said these are homes that have been foreclosed?
Problems we foresee at the moment:
1. Why this $199 membership fee? Is this scammy?
2. Something seems off about the marketing of this. There’s no credit check, which seems like a bad sign. And when the guy was mentioning possible homes in the area to me, he mentioned a house that was $180,000 which would have a monthly rate of $900/month. He then said, “But if that is too much for you, we also have less expensive options.” He knew that it was for me and my boyfriend, and it seems ridiculous that he would think $900/month would be “too much” for a dual-income couple…
3. Even if problems 1&2 checked out, the main concern is that this would be a major headache in three years when we plan to leave the area. We’ll still be responsible for this house, so we’ll need to either sell it or rent it out to someone. Would we be likely dealing with this house 20 years from now?
Does anyone have experience with this or knowledge of rent-to-own situations? Is this something worth pursuing? How does it all work with the home being foreclosed and now being in this situation rather than in a regular home-purchasing situation?
(Just a note for those of you in higher cost-of-living areas, if you think these prices seem “too good to be true,” the cost of living in Durham is actually VERY low, and very nice 3-bedroom single-family homes typically sell for around 150–200k and rent for ~$1100/month!)
This question is in the General Section. Responses must be helpful and on-topic.