How to find rent-to-own homes

Where offers come from

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• Individual owners and landlords. Some will consider a lease-option if asked — including owners of homes listed for sale that haven't sold, or landlords of a home you already rent.
• Real estate agents. An agent can ask sellers whether they'd consider a lease-option and can pull recent sale prices to check the proposed price.
• Companies and investors that buy homes and lease them with an option to buy — sometimes a home you pick yourself (see below). Ask for sample contracts, how many tenants actually bought, and what happens to credits if you don't.
• Listing and subscription websites. Many mix foreclosures, pre-foreclosures, and rentals into “rent to own” categories. One such site notes on its own pages that “not all homes are available for Rent to Own” (Foreclosure.com).

When an investor buys the home you choose

Some buyers use a three-party route: you find a home that's for sale, an investor or company buys it from the seller, and then rents it to you under a lease with an option (or agreement) to buy it from them later. It can fit someone who can afford the rent but can't get a mortgage yet. It doesn't guarantee any of the steps:

• The investor decides whether to buy, at what price, and on what terms, and can turn down the home or the applicant.
• Your later purchase price is negotiated with the investor, not the original seller, and is often higher than what the investor paid. Some contracts set it by a formula that rises over time.
• Nothing in the arrangement guarantees that you'll qualify for a mortgage when the term ends, that the sale will close, or that you'll get the option fee or credits back if you don't buy.

Before signing, get written answers to these questions:

• Who will hold title after the purchase? Confirm it in county records once the investor closes.
• Will your option or purchase agreement (or a memorandum of it) be recorded?
• How is your purchase price set, and can it change?
• How much of each payment is credited toward the price, and when are credits lost?
• Who pays for repairs, property taxes, insurance, and HOA dues during the lease?
• What happens to your option if the investor sells the home or falls behind on their own mortgage?

Check any offer before paying

1. Confirm the person offering the deal is the owner of record in county records.
2. Search for mortgages, liens, foreclosure filings, and unpaid property taxes.
3. Get the lease and the option or purchase agreement in writing, and have a lawyer review them.
4. Get an independent inspection.
5. Run both outcomes — buying and not buying — through the cost calculator.

The Texas Attorney General's advice applies everywhere: “Always use a title company” (Texas AG). The full list is in the due-diligence checklist.