Tired of living in apartments that have noisy neighbors, barking dogs, and flights of stairs to climb every day? Don’t have 20% to pay? You can make the entrance to a house come true. There are sellers everywhere willing to negotiate. Some are interested in owner financing, which was once called a ‘Land Contract’ years ago and is now known by the term Lease to Purchase / Option. Rental properties are generally your best bet for a leasing option. Since we don’t live in a perfect world, there are things that could come up to make this process a pain. The most important things to make sure you have in place are:

• Contracts – This is the most important thing to have and it should explain everything. Who is in charge of lawn work and repairs. What is necessary to get your security deposit back and what could void your return once you move in.
• Repairs: As we indicated in the contracts section, clarify who is responsible for the repairs. Generally, if you are renting, all repairs are the responsibility of the landlord. If you are buying through landlord financing, the tenant is responsible for all repairs. The tenant could negotiate that they are responsible for a certain amount of dollars a year in repairs, and that the homeowner covers anything in excess of that amount.
• To deposit – One of the biggest problems that arises once a tenant moves out is the security deposit. As stated above, having every detail of the tenant getting it back and what would void their return will cause a lot of trouble and potential court cases.
• Escrow – Lastly, probably the most important of all would be to set up your payments in an Escrow account. If you are renting, you won’t have to worry as much about the security deposit as if you were buying through owner financing. You ask why an escrow account is so important. Let’s say the homeowner is putting a percentage of his monthly payments toward the sale price, reducing what he would have to get a mortgage (I’ll explain in more detail in another article). Suddenly, someone knocks on the door, saying that this property is in foreclosure. What?!?, You paid them on time, all the time. However, they did not pay the mortgage company and now you are homeless and all the equity you have accumulated on this property is gone. If an escrow is set up, you pay the business, that business pays the mortgage, and you still have a roof over your head.

Using these steps will allow the process to flow smoothly.