Rent to buy question?

Unless, the landlord is desperate or doesn’t like being a landlord I don’t know how much they’d work with you. They’d have to be really nice and at that, I wouldn’t give you any credit for rent paid. You gave the rent for rent. If the house is worthwhile especially being in realty I’d think they’d take it to the open market if they wanted to sell it.

That would be nice if he were willing to do that but what’s in it for him? I doubt if a lender would accept some sort of retroactive lease option. Are you thinking that the landlord would finance it for you? Why would they do that if you are making the mortgage payment and he is getting the equity?
You need to propose something that makes it worth while for the owner to give up what he’s already got.

Sorry, that isn’t how it works. Your landlord is charging that rental rate because it is what the market will bear. He is charging you about $1300/mo while a conventional mortgage + taxes and interest is less than $900/mo ie he is clearing a $400/mp profit. As a businessman, why would he give you his profit for the last 2 years?

A conventional mortgage would require a good credit record, an income of at least $60,000 and a 20% down ($30,000) that isn’t borrowed money and cash closing costs of $3500—$4000. Anything less would drive up the interest and monthley mortgage.

If you wanted to have your landlord finance the sale as a lease option he will expect an additional $500—$750 rent for 2–3 years to be applied toward the down. If you change your mind often that money is considered a nonrefunable deposit. Then if he does finance the sale the mortgage will be as much as $138,000 at 8% which means a mortgage payment of $1200 + taxes + insurance + maint & repair costs for a total of at least $1500/mo, probably more

Think about it

Also if he is making $300 profit, that is a 30% return on inhis investment. Why should he settle for the 8% return in interest?

Approach the landlord and tell him you like the house and would be interested in doing a lease purchase on it. If he is interested in selling, he may be willing to allow some of your monthly rent to go toward a down payment on the lease purchase. This will give you time to work on your credit. Another option might be owner financing.

Keep in mind he may have no interest in selling. Plus your idea of the homes value and his may be far apart.

If you can’t work anything out with him there are lots of selllers out there who might be willing to work with you.

As @galileogirl points out, the landlord is likely to actually lose money if he sells.

Suppose he’s got the house mortgaged at a good rate—3.5% down, 5.5% interest rates. That winds up costing about $821; we’ll throw in a 1% tax rate, which makes the monthly payment $946. Your landlord is renting it to you for $1350. That means he’s making $400/month profit.

(Some of this, also, might be tax deductible for him; the mortgage interest almost certainly is! So after the tax paperwork is done, he is probably seeing more than $400/month profit from you.)

And housing costs will go up eventually, but his mortgage payment won’t. So in five years, when he’s renting the house for $1600, his mortgage payment will still be $821 plus taxes, and even if they double and he’s paying $1070, he’ll still be making $430 in profit.

I’d expect your offer to use the rent you’ve already paid as a down payment will be rejected, and if you’re lucky, he won’t laugh in your face. You’ve already paid that money to him as rent; you’re asking him, basically, to donate it back to you to use as a down payment. What’s in it for him? What benefit does he get that’s worth more than the $400 a month he’s seeing in profit?

Each “rent to own” contract is different. It is an agreement between the owner and the buyer. There is very little that is standard on this type of contract. Usually, the amount of money that is going towards buying the house is added on to the rent.

Since you have been paying rent ontime and shown you can be trusted, the owner might be willing to agree to accept an additional amount over and above what you have been paying as partial downpayment for a future purchase.

I suggest you contact other real estate agents and find out how they would handle a plan like that. Look for experienced rent-to-own agents.