Rent To Own - Forecast Bright As Home Sales Continue To Be Gloomy

Housing remains the weakest part of the American economy, analysts tell us, and we shouldn't expect much improvement over the next few months. "These numbers are at rock-bottom by historical standards," said U.S. economist at IHS Global Insight, Patrick Newport. This report comes at a time of the year where home sales should be at its peak. However, while traditional home sales reports have been bleak, the rent to own market is on the rise because, for many, it's become the only way they are able to buy or sell a home.

Obtaining definitive numbers for these types of purchases is difficult since they are private rental agreements with a purchase option until later recorded as a home sale when the transaction is completed, often 2-3 years depending on the agreement terms. But indicators of increased on-line searches, books and documents sold, as well as general inquiries throughout the real estate and mortgage industry show that interest is strong and many rent to own transactions are being generated.

For many home sellers who've had homes on the market for many months with little or no activity, the immediate interest generated from one rent to own advertisement can be overwhelming. Today's market is flooded with better-than-average risk buyers whose credit issues are recent due to current market and economic circumstances, but previously were responsible and timely with their obligations.

With a bankruptcy or foreclosure would-be buyers are unlikely to qualify for a home loan for some time, and with the great increase of home-owners-turned-renters, the price of rent continues to increase. A rent to own home agreement fixes the cost of rent for the specific period of the agreement, giving buyers another incentive to buy.

Wednesday, June 22, Federal Reserve Chairman Ben Bernanke said the housing market was a strong and persistent factor hurting the broader economy. With the continuing vice-like grip on traditional lending and increase of the rent to own home trend, it would not be surprising if the federal government at some point were to identify this trend as a viable way to increase housing sales, and possibly offer incentives and tax benefits for these types of purchases, and strengthen protective regulations for both buyers and sellers.

It could also be to the benefit of real estate agents and brokers to be willing to facilitate these types of sales, although it would mean a delay of their primary commission for 2-3 years. Frequently real estate professionals will provide property management services during the lease period, since most property managers are real estate brokers. They can charge an up-front fee for providing initial services; paperwork, credit and background checks, bringing in a buyer or seller, etc., and if they choose, they can administrate the monthly payments for an additional monthly income until the sale closes in 2-5 years.

The rent to own option, when properly administrated, could help put people back to work, stop the housing drag on the economy, and pay mortgages that may otherwise be forced into foreclosure. Those looking into this option for themselves need to research the topic well and make themselves aware of any potential pitfalls to avoid, but a rent to own home sale can not only be a good option for buyers and sellers, but potentially can be a good trend for the American economy.

Deltona, Florida Real Estate and a Little History

Florida became a state in 1845. Just prior to that, the Timucuan Indians were the original inhabitants of what is now known as the City of Deltona in Volusia County. Fish and fresh water was plentiful. When Florida became a state, steamboats began making regular trips up and down the St. Johns River to Lake Monroe. Soon, visitors began settling in the state and a community developed on the shores of Lake Monroe near the steamboat landing. The City of Deltona was founded in 1962. It is the largest city in Volusia County and is located east of Interstate 4 and north of Lake Monroe. Deltona, Florida is the twenty-ninth largest city in Florida with an estimated population in 2009 of 84,264. It is North of Orlando, Florida and is considered a suburb of Orlando. The City of Deltona is almost entirely residential. The city's economy is largely a state and regional economy depending on surrounding communities for work, shopping and entertainment. The economy in Deltona is mostly service oriented.

There are 7 elementary schools, 3 middle schools and 2 high schools in Deltona, and approximately 4 private schools. A campus of Daytona State College is within the city limits. Also nearby there is Seminole State College and the University of Central Florida.

Deltona is served by Central Florida Regional Hospital, Fish Memorial, Florida Hospital/Deland, Florida Hospital Altamonte, and Florida Hospital at Lake Mary. Florida Hospital Medical Center and Orlando Regional Healthcare System (ORMC) are less than 45 minutes south of Deltona via I-4. Travel a bit farther and you'll find Walt Disney World, Universal Studios and Sea World. Recently opened in Orlando is the new Amway Arena, home of the champion NBA Orlando Magic. Just east of Deltona are miles of pristine beaches on the Atlantic Ocean including the World's Most Famous Beach, Daytona Beach.

The name, Deltona, comes from a combination of two nearby cities: DeLand and Daytona. It has grown steadily since it was officially incorporated as a city on December 31, 1995.

Deltona's Parks & Recreation Department consists of 18 neighborhood and community parks and provides recreation for all ages. One of the parks, Tom Hoffman Park, now has a butterfly garden, a walking trail, and an open-field play area. Campbell Park has a floating dock, lighted tennis courts, beach volleyball courts, picnic areas, gazebos, a playground and the Lake Monroe Boat Ramp. There is also a fitness trail. Future projects include a new 122-acre sports complex in the Alexander/Providence area. The city continually strives to provide safe areas for its citizens to enjoy the nature trails in the city parks. They are currently working with Volusia and Seminole Counties and the St. Johns River Trail system to connect the trails into the Seminole County Lake Monroe Loop and the East/West trail.

Previous, current and planned park improvements have improved the city environment. The city plans to continue recreational and environmental improvements for years to come. Deltona is a community that cares for its residents.

The average sales price of a house in Deltona, FL was $86,865 in June 2010. The median home value was $143,910. There are currently an estimated 17,067 households in Deltona. This is a family oriented community minutes from major entertainment, beaches, playgrounds, and healthcare facilities in a natural setting. Come home to Deltona.

Could Federally-Encouraged Rent To Own Home Sales Help Strengthen The US Economy?

Could the rent to own home sale market help pull the U.S. out of its economic slump?

According to Federal Reserve Chairman Ben Bernanke on Wednesday, June 22, the U.S. housing market is a strong and persistent factor hurting the broader economy. It's widely agreed that the massive amounts of foreclosures flooding the market with below cost pricing, is one of our country's biggest economic drains.

But as we've seen over the last few years, this is one big cycle with no end; foreclosures offered at below market pricing forces all housing prices to continue downward. Those who are trying to sell in order to avoid foreclosure have a threshold where they can no longer afford to sell their home and are forced to walk away, adding to the foreclosure glut on the market.

With lending restrictions reducing the amount of qualified buyers and declining house prices forcing homeowners into foreclosure, it simply regenerates more credit-damaged consumers unable to obtain financing and adds more pricing competition by continually adding foreclosures to the market.

The future isn't looking very encouraging either, with 1.2 million expected home foreclosures this year, according to Realty Trac, Inc. and an additional 1.7 million 'shadow inventory' of homes at risk of foreclosure lurking close behind, according to real estate data firm CoreLogic.

Eventually, we could become a nation of renters with the rich few as the exclusive property owners, or as previous generations called them: serfs.

One option gaining popularity that would help avoid that prospect is rent to own home purchases. The market is swelling every day with better than average credit risks who've recently had hard knocks to their credit rating, but have been otherwise responsible with their obligations. Those buyers will be unable to obtain traditional loans for a period of time while there are almost as many home sellers waiting for their telephones to ring with an offer.

By government encouraging private rent to own home purchases with tax breaks and financial incentives there would be a reduction of homes going into foreclosure and being added to the market, stabilizing home prices. Rent to own home sales would add a layer of 'privatized' protection between the lender and reclaiming a foreclosed property, instead continuing existing loans at their current interest rate.

Additionally, the sellers have to live somewhere as well. They may choose to scale down their home choice and rent to own a less expensive place, providing additional cash flow after mortgage payments are met. With the rental market flooded with the onslaught of foreclosed property owners, rents continue to increase. Renting to own establishes a rental rate that is good for the extent of the loan, providing additional incentive for buyers.

If they choose, real estate agents and brokers could expand their services to include aspects of property management, keeping themselves in the mix while providing valuable services to inexperienced home buyers and sellers. They could charge an amount equal to a percentage of the down payment to find buyers and sellers, facilitate the paperwork, and provide background and credit checks, among other things. Later they will collect their real estate commissions when the transaction closes down the road, which is better than never collecting a commission. For a monthly fee a broker could facilitate the monthly rental/payment exchange as well.

Government incentives would generate even more interest from other professionals related to the home sales industry, offering their help and expertise to help facilitate a successful rent to own transaction.

Needing to be addressed however, would be the risks typical with a rent to own home purchase, first by the parties themselves, and hopefully expanding into acceptable practices and laws.

Home sellers are risking their property to strangers and home evictions and property damage are expensive. Additionally, the biggest risk to a successful rent to own transaction for both parties is when the buyer is unable to qualify for a traditional loan at the end of the lease period. Home owners are back where they started, and if they are unwilling to take another chance on the buyer qualifying, they may choose not to extend the agreement and the buyer loses his down payment plus any rent credits earned during the term of the lease.

To be effective and to ensure a rent to own home sale result there needs to be proof that the buyer is working with someone credible to help rectify credit issues, and the length of the lease needs to be long enough for the buyer to qualify for a traditional loan.

Additionally, there needs to be proof that the owner is current on payments and not near foreclosure, that there are no outstanding liens and that the buyer's payments will be applied to the mortgage and not to the owner's pockets. Lenders could help facilitate this, earning an extra fee while looking after their existing loan assets.

It seems as if there could be ways to combat this economic funnel, help increase home ownership and stop the bleeding from the main economic artery - the housing market. By researching and participating in the rent to own home sale individuals can start now to help take control of their financial futures and hope other professionals fall into line. But it would certainly get a major lift if the government would provide additional incentives for people to take a more 'privatized' step to economic recovery.