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post #1 of 19 (permalink) Old 11-28-2006, 10:21 PM Thread Starter
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Rent to Own - Condo

Thoughts?

I'm casually looking to grow up and stop a 10 year run of donating sizable rent checks to this fine city. That said, downpayments on the places I'd like to live present a big hill to climb. I'm also a year or two away from a healthy credit rating.

I'm trying to learn more about the rent-to-own process. There are listings here that I'm interested in - but I'm curious about the contract. I understand that the paperwork will inevitably favor the homeowner, but I'm wondering what my potential risk/liability would be?

In particular -

- are rent payments adjusted to reflect the larger commitment?

- what % (if any) of my rent payments would be applied to an eventual downpayment?

- what (if any) responsibility would I assume for: assessments, taxes, repairs etc.

- what would I stand to lose in the event that the deal went sour after a given period of time?

If all of these points are subject to legal negotiation (and differ by situation/individual) then so be it.

Anyone done this? Know people that have?

Thanks in advance.

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post #2 of 19 (permalink) Old 11-28-2006, 10:58 PM
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Quote:
Originally Posted by Underdog View Post
Thoughts?

I'm casually looking to grow up and stop a 10 year run of donating sizable rent checks to this fine city. That said, downpayments on the places I'd like to live present a big hill to climb. I'm also a year or two away from a healthy credit rating.

I'm trying to learn more about the rent-to-own process. There are listings here that I'm interested in - but I'm curious about the contract. I understand that the paperwork will inevitably favor the homeowner, but I'm wondering what my potential risk/liability would be?

In particular -

- are rent payments adjusted to reflect the larger commitment?

- what % (if any) of my rent payments would be applied to an eventual downpayment?

- what (if any) responsibility would I assume for: assessments, taxes, repairs etc.

- what would I stand to lose in the event that the deal went sour after a given period of time?

If all of these points are subject to legal negotiation (and differ by situation/individual) then so be it.

Anyone done this? Know people that have?

Thanks in advance.
Have you try to get a home loan or do you think you can't get home loan? I would check out www.MyFICO.com see what your score are at they pull all 3 credit companys. There lot lender they may loan you the money,but at higher interest rate. You can refin for low rate following year.

I believe rent owns don't work out for the renter. It works out more for the owner you come out on losing end. I would get your three scores from the website. I believe there is a site were you can do numbers in what you can afford to pay. So I would do some more homework before you go for rent own stuff.

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post #3 of 19 (permalink) Old 11-28-2006, 11:01 PM
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You should definitly talk to a lender. I think you would be surprised what you can qualify for, and with little or no down payment. If you need the name of a couple lenders, let me know

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post #4 of 19 (permalink) Old 11-28-2006, 11:14 PM
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You should definitly talk to a lender. I think you would be surprised what you can qualify for, and with little or no down payment. If you need the name of a couple lenders, let me know
+1

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post #5 of 19 (permalink) Old 11-28-2006, 11:34 PM Thread Starter
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Good advice guys - and I appreciate it.

Here's my dilemma:

I can qualify for a loan just fine - and I have seen condos that I could live in within that price range. HOWEVER - I have expensive tastes (), and I've grown accustomed to my downtown lifestyle. Very accustomed. As it turns out, none of the places that I can reasonably afford are within a $50 cab ride of where I'd prefer to live.

I can continue to rent here indefinitely - well within my budget.

Ownership is attractive from a responsibility standpoint, but without a healthy deposit, the mortgage would be 2x the rent for the same space. I can rent like a king for $1000/mo, but a mortgage plus fees would be $2000+/mo.

I can't justify that punishment at this time. That's why a rent-to-own (where that $1000 nut can potentially buy down my mortgage over time) is so attractive.

Guess I should have mentioned all that shite in the first post eh? Eh.

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Last edited by Underdog; 11-28-2006 at 11:36 PM.
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post #6 of 19 (permalink) Old 11-28-2006, 11:40 PM
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Great question Underdog. I've got "a friend" (J/K seriously a true friend, not me!) who's three scores might add up to a 400. If he had four quarters a bank probably wouldn't give him a dollar!

He had a business fail and on top of that his business partner took many assets after putting most of the bills in my buddies name. Sucks for him but bankruptcy was his only out. This happened about two years ago. Any advice?

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post #7 of 19 (permalink) Old 11-28-2006, 11:43 PM
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Bite the bullet and get into something Patrick. I to am looking to do the same thing. It is hard to down grade my toys and money wasting but i know in the long run I need to do it. Ever since my divorce i have been spending money like it is water but hey you only live once eh.
post #8 of 19 (permalink) Old 11-28-2006, 11:53 PM Thread Starter
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Spending money like a dipshit never bothered me Steve. That's why bartenders like me so much. My problem is in the logistics. Things to consider for the armchair life-coaches out there:

- I'm young (devilishly handsome) and single.

- I plan to live in a 1bdr place in the city

- I will most likely have a life change of some sort (wife, kids, crippling herion addiction) in the next 5-7 years that will outgrow a 1bdr in the city

- I will probably not win the lottery and be able to keep this property as an investment long term

So

- The gain from resale on this property in 5-7 years would need to equal or outweigh the potential savings I would accumulate by pocketing the difference (rent v. mortgage+fees) over the same period.

Noodle that one for a bit.

<---- Patrick

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post #9 of 19 (permalink) Old 11-28-2006, 11:54 PM
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You have think about this you want just throw money away. You have know tax shelter at all. You are give your money to uncle sam and landlord. You as singlr have very little tax deduction. That is live style you can come back to later on or you can bite the bullet.
I can tell you how to live your life I'm not your dad and I can say you are my best buddy. I would do anything in my power to help fellow CLSBer,but I can tell you from my live experience and mistake I have done and hope you make some the right move.It take many years clean up my credit and own my first home.
I wish I was your age now could get approved. I couldn't at that time lender were not as flexable as they are not and rate were hell of lot higher. All I was interest in were I was get my first drink on for the weekend or some pussy.
So think if go for something you will be better off then renting any day. Get some change back at end of the year, it improve credit score and it first of all it yours. So if want paint the wall pink you can.

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post #10 of 19 (permalink) Old 11-29-2006, 12:05 AM Thread Starter
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Don't worry - my days of reckless spending are behind me (I think). I understand the tax ramifications, and the obvious boost this would have on my healing credit rating.

My question is purely financial.

If the finish line is five years away, and I can rent or own in my hood of choice - here's the numbers game.

- Buy a $250K place. Mortgage + Fees + Taxes = $2K/mo
- Rent a $250k place. Rent = $1K/mo

Assuming I save the difference ($1K/mo) I'd have $60K plus interest after 5 years.

If I buy, I have to hedge that I can sell for $310K+ (covering realtor fees etc) to "break even".

Dig?

<---- Patrick

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Last edited by Underdog; 11-29-2006 at 12:09 AM.
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post #11 of 19 (permalink) Old 11-29-2006, 12:15 AM
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Quote:
Originally Posted by Underdog View Post
Good advice guys - and I appreciate it.

Here's my dilemma:

I can qualify for a loan just fine - and I have seen condos that I could live in within that price range. HOWEVER - I have expensive tastes (), and I've grown accustomed to my downtown lifestyle. Very accustomed
There is your answer, you have expensive tastes thus the 1K extra a month (renting) will allow you to keep up your lifestyle. But on the other hand, pride of ownership, tax write off and appreciation are something you can't get renting, unless your the land lord. Just my
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post #12 of 19 (permalink) Old 11-29-2006, 12:45 AM
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Here are the questions you need to answer. My friend is in the same situation right now and im helping him buy his first house right now.

* Are you looking for long term gains right now in your life? If so, buy the condo/

* Do you plan on spending foolishly? id so its not bad, but stay renting. because u default on your mtg and say bye bye to any good credit you had.

* Not sure about you finances, but can you reasonably afford it? Remind you property taxes are claimed to be rising right now in chicago. Also, its a condo, you will have your condo association fee's and your own personal homeowners ins for the things inside.

* Watch the market, unfortunatly the condo boom is gonna fall eventually. There are 20 buildings going up per year right now downtown. Eventually its gonna crash. Condo buildings are going to start appreciating and depreciating like neighborhoods since there are so many now.

Getting the mtg and financing is obviously the easy part, dont let that concern you. Me or one of the members here can get ya through that step.

If you rent though, your paying somebody elses bills. If you buy its alot more cost and responsibility but you take the equity and cash along with it when your life changes in 5-7 years

and btw realitors are scum, stay away from em if at all possible..


Also appreciation is high downtown right now, so in 5 yeas you should be fine to sell and make a good 50k or so in equity. And btw the 60k ud save will onyl work out if you actually take that money and put it aside. Otherwise that cash is going to like you said "lavish lifestyle" and sounds like its gonna get pissed away. Then 5 years later you leave, no 60k, no equity, and no chance of making a profit from a sale.

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post #13 of 19 (permalink) Old 11-29-2006, 01:47 AM
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i like this thread!
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post #14 of 19 (permalink) Old 11-29-2006, 07:04 AM
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Underdog, I hear your concerns 100%. Am in sort of the same boat, but rather than rent I kinda own with family but also live with them.
The choices are not easy when looking. But avoid the pitfalls most people make and make sure in the end you are happy. Many of my friends cannot even think of buying a single family in my area 350k+ so they moved way the fuck out. Sure they got more for their $ but now they bitch their commute to work is too far or no one visits them. They isolated themselves geographically. The other mistake is the people who banks are more than happy to give a huge loan to but now they can't afford to go out or would be doomed if they lose their job within 1 month. Interest only loans 100% financing what ever you want to call it. The are basically vehicles to get people who can't afford homes into them with tragic results when interest rates change. This is such a reality that foreclosures are up 48% this year!!!!! Not a good choice where property values are dropping and rates rising.
I am no expert but I think values will keep dropping for a while more. Straighten up your credit and try to pay down any debt. and then go balls out looking. You never know, you may stumble upon something by accident later. A 30 year note is a big promise so I say be 100% sure of the situation. Yeah it sucks paying rent and basically helping your landlord pay off his property but it's better than jumping into something that you won't be happy with just to have something. good luck.

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Last edited by under200; 11-29-2006 at 08:57 AM.
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post #15 of 19 (permalink) Old 11-29-2006, 08:31 AM
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Sounds like you really need a "forced" savings program...buying a place would help with that excessive spending.

"Rent to own" terms can be anything in your or the owner's imagination...tough to comment on them. I would avoid such a contract that was more than 12 months.
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post #16 of 19 (permalink) Old 11-29-2006, 09:04 AM
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Mortgage interest is deductable, as are certain expenses related to maintaining and improving a home (or condo). Interest earned in a savings account or CD or whatever is taxable. (I can't wait to meet my new tax guy!)

Yeah, it costs more to own but the tax breaks will help (especially for the first few years where the majority of your monthly payment is toward interest) - and if you buy right, you should have little difficulty walking away with a profit (or at least being made whole). When shopping for a property, make sure you know the actual purchase prices of comparable properties in the area (get as much historical data as you can - your realtor can do the legwork for you, all that stuff is public record) - I think Crook County has it online now. Personally, condos in Chicago are too scary for me... but if you take your time, do good research and don't get emotionally involved in the purchase you should be able to make a good purchase.

100% financing is not a horrible thing per se. If the appraisal on the property comes back significantly higher than the purchase price AND the sale price data on the comps support the appraisal, you're pretty safe. There are so many different products available, just make sure you are dealing with a reputable financing source and make sure you ask questions until you totally understand what you're getting.

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post #17 of 19 (permalink) Old 11-29-2006, 09:37 AM
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Quote:
Originally Posted by Underdog View Post
Don't worry - my days of reckless spending are behind me (I think). I understand the tax ramifications, and the obvious boost this would have on my healing credit rating.

My question is purely financial.

If the finish line is five years away, and I can rent or own in my hood of choice - here's the numbers game.

- Buy a $250K place. Mortgage + Fees + Taxes = $2K/mo
- Rent a $250k place. Rent = $1K/mo

Assuming I save the difference ($1K/mo) I'd have $60K plus interest after 5 years.

If I buy, I have to hedge that I can sell for $310K+ (covering realtor fees etc) to "break even".

Dig?
I am by no means a financial expert. I bought my townhouse in Romeoville with no money down. I did FHA financing, under the plan that replaced the Ameridream program. With taxes, insurance, ect, my 3 bd 2 bath 1.5 car garage, fireplace, finished basement, monthly payment is under $1300. There is a two bd 1 bath two doors down from me for sale. Move to the burbs. If you lived on my block, we can me the majority for sport bikes then. And I have a hot ass wife
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post #18 of 19 (permalink) Old 11-29-2006, 11:24 AM
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Quote:
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I am by no means a financial expert. I bought my townhouse in Romeoville with no money down. I did FHA financing, under the plan that replaced the Ameridream program. With taxes, insurance, ect, my 3 bd 2 bath 1.5 car garage, fireplace, finished basement, monthly payment is under $1300. There is a two bd 1 bath two doors down from me for sale. Move to the burbs. If you lived on my block, we can me the majority for sport bikes then. And I have a hot ass wife
is this like incentive?

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post #19 of 19 (permalink) Old 11-29-2006, 11:25 AM
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Anything to outnumber the HD and indian guys push starting their bikes every morning is worth a little eye candy.
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