Could you please inquire with the owners if they are willing to rent to own?

Being an enthusiastic thrifter of CDs, books, and phones, I spend a lot of time on Facebook marketplace looking for good deals.

There is a default message you can click to send a quick message to a seller asking if the item is still available. “Hi. Is this still available?”

A lot of sellers get annoyed with it because they get a bunch of these messages, and after the seller replies, they get no response.

When I hit that default message, I always followup with another message right away asking where I can pick up the item and if there is flexibility with the price (if I feel it is over priced).

The same sort of thing happens when I list a house for sale and it hits the public side of the MLS (realtor.ca). 

I get a bunch of emails like this:

General inquiry for 35 MAIN AVE, Toronto, Ontario M7G3V5, #V8398866 – it’s the equivalent of the default Facebook Marketplace message.

A simple click and it’s sent.

The default message is always the same, 

Message from Makayla:

I would appreciate more information about 35 MAIN AVE, Toronto, Ontario M7G3V5.

and so is my response,

Hi Makayla, what information are you looking for?

Most of my replies go unanswered. Some just want to know about open houses, others would like me to take them through it because their agent isn’t available.

Ya, OK.

This morning, I was surprised with this message:

Message from Holly:

I would appreciate more information about 35 MAIN AVE, Toronto, Ontario M7G3V5.

Which had this note underneath:

Hi Mike,

Could you please inquire with the owners if they are willing to rent to own?

Holly

My goodness, Holly, why didn’t I think to ask the homeowners if they would consider a rent-to-own option from the beginning?

Because people want to sell their houses when they list it for sale.

Most sellers need the proceeds of the sale to be able to afford their next house.

I have a sneaky suspicion of where Holly came from; she either read a book like Rich Dad, Poor Dad or went to a Scott McGivilray seminar (or similar) where they have these programs and options to be able to find cash flowing properties, or home buying alternatives, like using other people’s money to buy homes. 

There’s a sucker born every minute, or so I’ve been told.

If you’ve never heard of this scheme, rent-to-own is a home buying arrangement that lets people initially rent a home with the possibility of purchasing it later. This rarely effective option is for those who want to own a home but have yet to save enough money for a down payment.

In other words, they can’t afford to buy a home in the traditional way through a mortgage lender like a bank.

The Liberal government website says, that in a typical rent-to-own scenario, a buyer commits to renting a property for a specified period of time, during which they have the option to buy the home at a predetermined price before the lease expires. This setup allows tenants time to build up funds for a down payment.

The agreement is set between the landlord and the tenant, with the understanding that as time progresses, the down payment accumulates, enabling the tenant to purchase the home from the landlord eventually. The key to these agreements includes a clearly defined option to buy at the end of the lease term and a set timeline for exercising this option.

How Does Rent To Own Work

Rent-to-own lets you use part of your monthly rent to save for buying a home later. It locks in the home’s price upfront to help you plan your finances.

But what if the property value changes before the set date? More on that later.

Like renting normally, you pay a set amount each month for a set time. But with rent-to-own, some of that money eventually goes towards owning the home.

There are two options:

1. **Lease-option agreement**: You can decide not to buy the home at the end of your lease with no extra fees.

2. **Lease-purchase agreement**: You agree to buy the home at the end of your lease. There may be penalties if you change your mind or can’t get a mortgage.

The agreement spells out how long you’ll rent, the rent amount, money set aside for the down payment, when you can move in, the home’s price, and when the contract ends. It’s important to have a lawyer review everything so you know what to expect.

Here’s a simple example:

– **Agreed Purchase Price**: $390,000

– **Option to Purchase Deposit**: $9,750 (due when you move in)

– **Amount Owed After 3 Years**: $380,250

– **5% Down Payment Needed**: $19,012.50

– **Monthly Rent**: $1,500

– **Extra Money Saved for Down Payment**: $600/month

– **Total Saved for Down Payment in 3 Years**: $21,600

– **Remaining Money After 5% Down**: $2,587.50

In this example, after renting for three years, you’d save $21,600 towards the down payment. After putting down 5% ($19,012.50), you’d have $2,587.50 left, which could be used for other costs. This shows how rent-to-own works and why it’s important to plan ahead.

Pros of rent-to-own:

Rent-to-own is designed to help Canadians enter the real estate market more easily. If you’re thinking about this option, here are some reasons why it can be beneficial:

1. **Build your savings**: Renters can save directly and through rent credits towards the home purchase. This allows time to address financial issues and achieve savings goals.

2. **Live in your future home**: Rent-to-own lets you live in the home you plan to buy, fostering a sense of pride and allowing time to assess the community and living conditions.

Cons of rent-to-own:

However, like any home buying process, there are cons to consider. Here are some potential risks:

1. **Property restrictions**: Some leases may restrict property modifications or features during the rental period.

2. **Property value fluctuations**: If the property’s value drops during the lease, you might still need to pay the agreed-upon purchase price. Understanding the agreement’s terms regarding appreciation is crucial.

3. **Missed payments**: Missing payments could jeopardize the agreement, possibly resulting in the loss of accumulated down payments or other penalties.

You see, Holly, there is much more to consider with your little plan to rent-to-own a home.

A hell of a lot more than simply asking the sellers if they would consider this option.