This session of Q&A with John Weber we decided to sit down and talk about Rent to Own. There are plenty of conversations of why this might be beneficial to potential home buyers. The risks, however, may or may not out weight the potential benefits.
Q: What are some of the benefits of Rent to Own
The biggest problem is the down payment. When it is done properly it can help work for those people. Maybe, if you don’t have the down payment, there is a reason
Q: What are the risks?
I’m just nervous about rent to own. I think people get caught up in them, it can be problematic for a lot of reasons. The whole thing can just fall to s*&%. The risks are it’s not real. The person you are paying the rent to can just fly south with your money. You think, hold it I was paying you rent towards, 2 or 3 years now, I thought I was going towards a mortgage.
Well, it didn’t happen that way and so and so took off with your money and you really don’t have any legal repercussions. It’s not something that is necessarily protected. It’s sort of faith and trust. They know you have a low credit rating, they know you don’t have a lot of money. It’s not a great way to protect yourself financially either.
Q: Who does this target?
It’s sort of preying on the weak. It preys on people who either have bankruptcy, possibly somebody with a legal record, somebody that go out of prison or jail so they are on probation. It’s hard to find a job, hard to find a place. So, it’s a high risk category.
Q: What are some red flags, for people who have no other choice but to do this, what can they look out for?
Dealing with a reputable company or taking your time and not being in such a hurry, get references on the person if it’s an individual, or the company. It would be much better to be dealing with a company than an individual, I think. To get some references, do some background checks, speak to other people who have done the same thing and hopefully you are dealing with somebody reputable.
It’s a sketchy area, it just is, it’s not that popular and it’s not very common. Rent to Own is rare in Ontario.