Grand Rapids, MI Rent to Own - Viable Option? (buyer pov)

[Jazmine Vaughan]

My husband and I are moving back to Michigan after 5 years away. We have excellent credit, but due to focussing on Volunteer work and not working full time the past few years, we lack the capital for a down payment. The thought occured to us that Rent to Own might be a good option if the right property presented itself. I have been reading the forums and blogs and it seems RtO would be a really good option for both us and the investor, depending on the contract. 

Does anyone have experience with this type of deal in Michigan? 

Any ideas on who we could talk to about potential rent to own properties or where to find them? I havent been able to find a dedicated website yet, like you would for foreclosures. 

Would it be appropriate to just reach out to any home that is currently on the market in our target area and price range?

Thanks for any and all help! 

[Account Closed]

Here are some things to keep in mind when considering Rent to Own options:

• It's a lease--fail to abide by the lease or make your monthly rental payment you can be evicted.  For example:  If one of your guest commits a drug violation--even if you're not responsible--you could be evicted under the 24 hour drug notice.
• If you're evicted, you'll likely lose your down payment.
• Make sure the contract is very clear on the differences between the security deposit, holding deposit and the option fee--if any.  The down payment and/or option fee is NOT the security deposit, therefore, security deposit laws do not apply.
• The sale of a property as a rent to own is still covered under Dodd-Frank regulations, meaning that you must qualify as the buyer as you would for conventional mortgage, i.e. your credit and income must be satisfactory to meet the obligations of the "purchase."
• A rental property owner may ask you to pay for repairs, etc. to the property.  This may work in some communities, but in some, the municipality will still hold the property owner (landlord) responsible for all the maintenance, repairs, etc. under the local housing code.

For all those reasons, you may want to consider a land contract.  Just make sure you can fulfill all your obligations under the land contract as well.  And, Dodd-Frank regulations still apply.

All the best!