Rent to own in San Antonio is a perfect solution in a soft real estate market for someone wanting to buy a house.
A Typical Rent to Own Scenario
It starts with a seller who knows that he wants to sell a house he is no longer living in. He also realizes the market just took a hit and he really does not need to settle for less than what he believes he can three to five years from now.
Said seller, we’ll call him Jim, says to himself, “Wouldn’t it be great if I could have someone in the house right now paying the bills and I get to lock in a 15% cost increase to market it five years from now. Then I can move in with my daughter and fish with my grandson.”
Well, Jim, you can. It’s called rent to own.
Now that’s the seller’s idea. However, what about the buyer? Why would anybody want to gamble on paying more than a property might be worth in the future?
Enter our buyer, Sarah.
She would like to buy a house. Sarah is thinking, “My divorce cost so much in court fees, I’d really love to get my daughter and me into a wonderful neighborhood without having to move a few times. I just cannot afford a down payment at the moment. It would be great to find a house that lets me rent it until I can finalize a loan on my own.”
She wants to buy a house. Sally is thinking, “My divorce cost so much in court fees, I’d really love to get my daughter and me into a wonderful neighborhood and not have to move a couple times. I just can’t afford a down payment right now. It would be great to find a house that lets me rent it until I can finalize a loan on my own.”
The Relationship of Need and Want
Sarah meet Jim. This is the beginning of a gorgeous rent to own relationship.
Both parties have a motive to not pull the trigger now. Jim’s is money; he wants more of it. Sarah has a strong desire to buy and has enough income to cover the monthly obligation, but other components of her financial situation don’t make her an ideal candidate for a conventional home mortgage.
The Rules of Rent to Own in San Antonio
The beautiful thing about rent to own rules is that they are completely negotiable. There are a few standard components to follow, but the dollars are not set in stone from any template.
So Sarah and Jim meet. Sarah knows that houses in the region are selling today for $250,000. She can manage a $1,300 monthly rent with her job and child support, but she doesn’t have even a low 3.5% for a down payment. While she can’t come up with $8,750, she is able to get $3,500 for an option to purchase the home.
Jim is actually okay with this as long as he knows the rent and expenses are paid on the home and he’ll get $287,500 when the sale actually occurs. The rent is going to have a 25% purchase fee so rather than $1,300 per month and quarterly maintenance fees of $200, Sarah will have to pay $1,625 monthly plus an extra $800 yearly to lease with the option to buy.
Sarah thinks about this, realizing that she will save time and money on having to move twice. Her daughter will be in the school she loves and Sarah anticipates her job will promote her in six months giving her more to save toward the eventual purchase.
Win-Win for Everyone
She’s building equity before she even owns the property and gets to enjoy living there in the meantime, making it her home. When for any reason during the option period, Sarah feels she does not want to live there, she is able to walk away from the deal. Of course, she can’t think of anything that would cause her to want to move away, but you never know and it is nice to have the alternative.
Jim is happy because he knows he’ll get the property price he actually wants. If the housing market booms in the next few years, increasing 20 percent, he may kick himself. However, this is the one gamble he chooses. If Sarah walks away from the option or cannot refinance, his expenses are paid, he retains the option money and sells the property.
Plus he likes Sarah and her daughter and hopes they have the same happiness and success that he and his family did in the house. Oftentimes, it’s nice to pay it forward in a way that everyone wins.
In case you need additional information on the rent to own option of buying or selling,