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Real Earth Solutions

Buy Land Without Money: Rent-to-Own

Rent-to-Own? What does that mean? Is it a good deal for the would-be homesteader who is interesting in buying land but doesn’t have a down payment?

Recently I received a comment from a reader who mentioned that he got the land for his homestead by using the rent-to-own option. Intrigued,  I asked if I could interview him so he could let the rest of you readers learn how to do this.

Thanks for agreeing to this interview, Carl. Your comment started a lot of questions from homesteaders who are struggling to save a down payment for their land. Tell us a little bit about yourself.

I got married about fourteen years ago and my wife and I both were interested in moving out to the country and making a living out of the land. The only problem was, we were flat broke. Both of us had good jobs. Rose, my wife, worked in a Child Care Center and I worked in construction as a drywall specialist.

Our pay was decent but it seemed to take everything we made just to pay the bills. We would dream about someday having enough to start our homestead but that’s all it was, just a dream.

We slashed our spending but I had school debts and Rose had a sizeable credit card debt. Each month we got closer to being debt free and then our car gave up and we were stuck with buying another one. It looked like we were never going to get that down payment.

To entertain ourselves on the weekends, we drove around and looked at farms and land in our area. We live in Tennessee and there are lots of small farms. The more we looked, the more we wanted one for ourselves.

One day we saw a run-down little farm we loved. The house was in bad shape and so were the outbuildings but I’m pretty handy so we walked the property for several weekends. It began to grow on us and Rose wanted to see inside the house so we called the real estate company on the sign.

I was honest and told the realtor that we didn’t have a down payment yet but he agreed to show us the property anyway. Said he needed to check on it for the owner so he’d meet us there. He talked about how it had been on the market for a long time, that there wasn’t a lot of interest in six acres and a rundown house After we saw inside the house we fell more in love with it than ever. It was close enough that we could drive in to our jobs and yet was secluded in a stand of beautiful trees but with lots of open pasture land.

At the end of our visit, the realtor said, “Have you people ever heard about the rent-to-own option?” That’s how we got started.

Share with us what the realtor told you.

He explained that if the owner was willing he could rent it to us and a certain amount of the rent would go toward the down payment. When we had paid enough, we could close on the property and get a deed with a mortgage. This owner was willing to carry the mortgage himself but the realtor said lots of mortgage companies would handle this.

Did that mean you didn’t have to pay anything down?

In this case, just the first and last month’s rent. Every contract is different. The realtor told us also how much cash we’d need when we were able to buy the place. It was the closing costs and included a year’s taxes, three months insurance, and the realtor and legal fees. It was something we could be saving for.

We were so excited that we had him write up an offer that afternoon and less than a week later, the owner who lived in another state, agreed to the deal. Talk about being over the moon! We couldn’t believe our good luck.

How long did it take you to have the down payment credited to you?

About two years. The rent he wanted was less than what we were paying in town so we could save enough for the closing costs during that time. The realtor wrote up the sales contract with the owner carrying the mortgage for 15 years. The day we closed on that deal you can bet we went out and celebrated.

How long ago has that been?

Over 11 years which means we have about 3 ½ years to go before the property is free and clear. We’ve made lots of improvements and grow our own food. Together we put in lots of “sweat equity” so the property is worth a lot more than we paid for it now but we wouldn’t give it up for anything.

I still take some drywall jobs and Rose works two days a week at the Child Care Center. We have two daughters and are home schooling them. When the mortgage is paid off, Rose plans on being a full time stay-at-home mom. She raises chickens and goats and does a lot of gardening.

I’ve built a tiny house on the property (less than 400 sq. ft.) for her mother who was widowed about 8 years ago. She and Rose grow herbs and sell them, along with goat cheese and some produce at a local farmer’s market on Saturdays. The girls like to get in on the act too and they make soap to sell.

Is there anything people should watch out for if they are wanting to use the “rent-to-buy” option?

Yeah, first they need to check with realtors in the area where they want land to see what the rules are about it. It’s called different things in different states and the rules vary. Even if a realtor doesn’t think the owner would be interested, I’d ask them to write up an offer. If the property’s been for sale a long time, the owner may like the deal.

Also, be sure there’s a binding legal document that spells out all the terms written by a real estate lawyer. Most realty companies can do this for you. Check to make sure there’s no clause where they can call the loan due or change the sales price or the interest rate.

I know about that. As I’ve shared in one of my posts, I got a bum deal but it was my fault. We just had a “gentlemen’s agreement” and a handshake. Carl, now 11 years later, is there anything you’d do differently?

(Laughter) Lots as far as how we went about building up the homestead. We had to learn most things the hard way but it’s been a wonderful life.

I wouldn’t change a thing about the “rent-to-own” option. It was the best thing that ever happened to us!

Thank you, Carl.

Sounds like a good deal to me. If you’d like to learn more about this, go to If any of you have more to add or questions about this, please comment below. Share this with your friends, also. They might be interested.


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