How rent to own works
RTO: How it works
Rent To Own is very simple – it’s a way to buy a home without a bank by putting TIME on YOUR side!
Build equity and repair credit issues, while you live in the house you want!!!
Face it, the price of housing is going up faster than a person can save! The longer you wait, the higher the price!
Straight renting is like a hamster running in his little wheel – he’s really busy, but doesn’t get anywhere. Sure, renting puts a roof over your head, but that’s it. At the end of the month, what do you have to show for your effort…nothing! And it’s time to pay rent AGAIN!
You want to build EQUITY – that magic word! Equity is the part of the home YOU own. Formula: Market Value, minus what you owe, equals your equity.
-When you pay down your loan, you are building equity.
-When the area housing prices go up, and you have locked in your house’s price, you just gained more equity, without paying a penny!
Most Americans have 2 problems keeping them from the enjoyment of home ownership:
Lack of Cash
1. Lack of cash – the bank wants a big downpayment.
We can work with you. For example, many people work out a time payment plan, spreading the RTO fee over several months.
Many people use their tax refund or quarterly work bonuses.
One man pledged his truck,
another stopped their appliance rental and used that money toward the RTO fee.
Ways to solve the cash problem:
-time payments to Grayson Management
-pledge your tax refund
-year end job bonus
-draw from retirement plan
-pledge your extra vehicle or boat
-cancel appliance rentals
2. Credit issues – bankruptcy, divorce, not enough time on the job, past mistakes…
RTO lets you into a home with a “rental application screening” –
Can you pass this rental screening…
-Do you have a steady job?
-Will your past 2 landlords give you a good reference?
-Do you make enough to afford the monthly payments?
#1 – Rent the house. This is a regular lease with one exception – you do the maintenance. By doing this, you can get credit toward your equity.
#2 – Sign up for the “To Own” part of Rent To Own. This involves paying the RTO fee – either pay in full or set up a time payment program. This can be very creative.
#3 – Part of your payment each month goes toward the house, building your equity, just like buying through a bank.
The program is set up for 2 or 3 years, renewable if you need more time.
Remember, time is on your side – you have time to clean up your credit while you are building equity!
When your credit is cleaned up, you can go to the bank and say “I have several thousand dollars in equity and I would like to refinance”.
Now the story is much different – the Mr. Banker says “Come in! Sit down! Would you like some coffee!? Let’s talk!”
Generally, the cleaner the credit, and the more equity built up, the better the bank interest rate.
The better the rate, the lower your payment.
You don’t have to play the “timing” game…my lease isn’t up until this date, I have to find and close on a house before that date, the bank rates are high the month I qualify for a loan, etc.
You can stay in the RTO home you already live in, the kids sleep in their same bed, everyday building more equity, and watching the bank rates. People with good credit get the good rates.
There are also many “first time home buyers” programs to get good rates. You can wait until these come available.
RTO lets you get into a home, enjoy it, set down some roots for your family; your kids can sleep in their own bed…giving you time to clean up your credit.
RTO lets you build equity in the home, like the bank but without the bank! – part of your payment every month goes toward the purchase price of the home. (EQUITY is the part of the home YOU own!)
RTO gets you into a home, even if you have filed bankruptcy. Remember…can you pass the rental screening?
RTO puts every penny of your RTO fee toward the house – no lawyers, accountants, real estate commissions, etc.
RTO allows you to put your rental Security Deposit toward your equity.
More things to know:
Every home is different. They are scattered throughout the area.
The list changes frequently. As homes become available, we update the list. If our selection does not suit your needs right now, check back.
You can stay in touch by:
1. check the website GraysonProp.com – bookmark it!
2. sign up for our free email updates on the website
Many people put down more than the minimum RTO fee. Why?
– helps them qualify if they have blots on their record.
– they have the money now and don’t want it to fritter away
– they are getting ready to file bankruptcy and need to “spend” any cash – RTO is not considered an asset that can be sold off
– builds instant equity
– gets them closer to owning the home “free and clear”
(can you imagine, when there will be NO MORE HOUSE PAYMENT!!)
– they trade in an asset worth more than the minimum RTO fee
RTO fees vary by home – usually depending on the price range of the home
Prices quoted include all taxes and insurance.
Some homes are available for purchase with “Sweat Equity” – your labor can cover the RTO fee. These usually require construction skills and tools.
RTO home prices are based on current market value appraisals.
Real life RENT TO OWN examples:
(not real names)
“John and Mary” were in a modular home. Their $400 per month “get-in-easy-mortgage” by the builder had escalated to an unreal $900 per month (read the fine print!). We sold them a gorgeous Victorian home ( parlor with French doors, wooden staircase, brand new kitchen, 2 baths, claw foot tub, all new carpet, etc.) for $800 per month. They locked in the price at $91,000 with the RTO program. 19 months later, they had met the bank’s requirements for post-bankruptcy financing and received a loan to buy the house at $700 per month. In addition, the bank appraised the home at $97,000 – $6,000 MORE than they paid for it!
UPDATE: “John and Mary” recently sold this home at a profit! They bought a brand new home!
“Bob and Sue” – Bob had a new job with good pay. The bank wanted to see 2 years on the job. They had not saved any money – remember, the better pay had just started. We worked out a plan with them where they put Bob’s extra pay toward the RTO fee each paycheck. Over time, they had accumulated $6300 equity. They applied that equity toward his VA benefits loan and now enjoy being homeowners!
“Sue and Sam” were caught in the hamster wheel – never able to get ahead. When their appliances broke down, they had to go to one of those pay as you go centers. They were paying $250 per month for appliances! We put them in a fabulous, home – something they can be proud of.
They did not need the rental appliances because the new home included new appliances! The $250 they used to spend went right into their RTO savings plan and got them into a beautiful home they can call their own!
“Bill and Jane, with daughter Janey and her baby Janette” bought a home together. The house has 2 levels, with bedrooms and bathrooms on each level. They pooled their income to get a bigger nicer home in a great neighborhood.
“Tom and Ginger” were able to cash out his IRA. When used for the purchase of their home, there were no penalties.
Call Brad or Cathy to work out a plan for your home!812-376-3500