How to Avoid Scams in Rent-to-Own Leases

It can often be difficult to take out a mortgage if you have a bad credit score or aren't financially stable, which makes rent-to-own properties so appealing. Unfortunately, rent-to-own scams are growing in popularity and are literally designed to steal your hard-earned money. The actual concept of rent-to-own is a pretty good idea, especially if you're someone who is trying to be a homeowner after going through foreclosure. The idea is that you move into a house and pay a monthly rent to live there over a specific lease period. After the lease ends, you have the choice to buy the home with your past monthly rent being put towards the down payment.

What is a Rent-to-Own Scam?

This isn't to say that every rent-to-own property isn't legitimate as many people have purchased their houses using this method, but there are many that can be seen as downright scams. In order to avoid these scams altogether, you need to know how to differentiate between a real rent-to-own property and a scam to take your money.

If a rent-to-own property is a scam, you'll find that the supposed "landlord" is only interested in homes that have been foreclosed on and vacated for months or years. Because the home hasn't been touched in a long time, the scammer assumes that the property won't be sold in the near future and will use it as rental property. These homes are often neglected and run down and are not necessarily visited by the people who actually own the land. The scammer then breaks into the home, changes the locks and places an advertisement online for a rent-to-own property.

For anyone who takes advantage of this low rental offer and actually moves into the house, they are essentially paying rent to someone who doesn't even own it. Over time, the renter, unaware that it's a scam, is discovered in the home and evicted. In some cases, the renter can even be charged with trespassing and put into jail. The scammer, at this point, is long gone and cannot be found to be reported to police.

How to Spot a Scam

In order to avoid falling into this rent-to-own trap, it's important to look for red flags that often identify it as a scam. For starters, you'll want to carefully look at the advertisement for the rent-to-own property before contacting the person. Oftentimes, these ads are cut-and-paste text from other ads. Do a search online with a copy of the ad and see if anything else comes up matching the text in the listing. If multiple listings come up with the same wording, it is probably a scam.

The price of the rent-to-own property may also be a sign that it's a scam. If it seems too good to be true and extremely cheap, it's probably a fraud and should be avoided. Unrealistical rental prices may seem tempting, especially for people on fixed budgets, but it's not worth it when you find out you're locked into a trick.

Look at the telephone number being used in the advertisement. It's common for these scammers to use a pay-as-you-go phone so that they can use a fake name. Only do business with landline numbers where the person can be legally identified. Also, if the "owner" only wants to correspond with you over email, you might be dealing with a scammer instead of a legitimate landlord.

When being shown the home, be on the lookout for locks that look as though they've been tampered with. If the home looks abandoned or disheveled, it might be a rent-to-own scam because the fake landlord won't put their money into fixing the property. Again, these scams often involve foreclosed properties, so it'll help to do research on the specific address you're looking to move into.

Some scammers even have an advanced payment plan and will ask for a down payment to be wired directly to them as part of your first month's rent. These money order and wire requests are normally done by someone living outside the country. This means that they don't even have a valid property for the renter to move into and you'll soon find out there's no house once the person disappears after receiving your cash.

Finding a Legitimate Rent-to-Own Property

As stated before, not every rent-to-own deal is a scam and there are many landlords who are more than willing to sell the house to their renter if they've been up-to-date with their rent and have been good tenants. However, considering the increase in these scams, it's important to do research before getting involved in something that is both dangerous and costly. The best way to find a solid, reputable rent-to-own is to find out more about the rental company. Speak with the person on a regular basis and do research on the home you're going to be moving into. It might even help to contact the town or city to find out who actually owns the property so that they can alert you if there is a scam at play.

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