Rent to Own Problems


This post is in: Real Estate
One Comment

08-17-2010-1

The real estate seminar goo roos are starting up again. Look for trouble if you’re receiving off-the-shelf, one size fits all advice.

Now, let’s be clear: I love a seminar approach when you get good information and meet other people who are successful in the same thing you are learning.

But I get mad when there is information given that is incomplete, outdated or plain illegal. It’s even worse when you’ve paid a few thousand dollars for that information.

One example is of something called a “Rent to Own” program or lease-option program. Back in the 1990’s, when Richard and I were aggressively building our passive real estate income, we did a lot of “Rent to Own” semi-flips. We took a small deposit and charged above market rent. The difference went to building equity in the property. Then, in 2 or 3 years, the tenant-buyer could exercise his option and buy you out.

Meanwhile, you’ve got better cash flow and better renters who really care about the property. It was also a way for tenant-buyers to buy a property when they couldn’t qualify.

The problem was there were some landlord-sellers who didn’t make the payments on the properties and tenant-buyers lost their homes.

States like Texas have stepped in and dramatically changed the rules. In fact, it’s almost impossible to have a Rent to Own program these days. Yet, I looked at a forum just this past weekend that said you didn’t have to worry about Texas laws, just buy this guy’s products on Rent to Own programs.

The most important trick here is to know who you can trust and who you need to run (and run fast) from.



One Comment

  1. J. Lynn says:

    Thank you for this post and your truthfulness, Diane!

    I can name a few ‘gurus’ you need RUN from!!!

    Newbie beware!!! When most of them talk about how much money they make…they leave out the part that most of it comes from YOU buying their courses!!!

    A LOT of them DON’T even do deals…they just teach! GO FIGURE!

    If you do manage to get started in this crazy business, I will say OpenRoad is MUST to help you keep your leads organized and manageable!

    http://bit.ly/OpenRoad3

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