Sylvi Bates
Sylvi Bates
2 years ago

Will FSBO rent property?

Are there any home owners who are trying to sell their homes be willing to rent until you can get a mortgage?
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2 years ago
Yes, that agreement is called a lease option. There are different ways to do it but typically you pay a small sum up front as a partial down payment, then pay above fair market rent (i.e. rent is $1200/mo, you pay $1500) with the extra going toward your down payment. The typical lease option period is 2-5 years which gives you that much time to get qualified for a mortgage.

The two biggest risks are...

A) Making sure that the owner is still paying THEIR mortgage. Most banks are required by law to honor leases in the event of a foreclosure, but I'm not sure about lease OPTIONS.

B) If you agree on a buying price at the beginning, you are obligated to purchase for that buying price even if the market value has decreased...but they are also obligated to sell if the market has increased. I'm sure there are ways to modify that agreement but I've never done a lease option so I don't know. Do the research.

C) If you back out at any point during the option period, you lose all of your money permanently or you can set up an agreement that you get your money back once the seller sells the property for whatever price in whatever amount of time. All those details will be hashed out when you do the agreement.

Hope this helps.

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