The Process: A Not-Boring Narrative Guide on Renting-to-Own
Foreclosure.com Scholarship Program Winning Essay 2020, (Grand Prize)
By Norman Cahil Murchinson | Texas A&M University
“Your degree will pay for itself!” they always told me. Apparently, I never had the foresight to ask, “how quickly?” Now, here I was: one degree richer, thousands of dollars in debt, and soon-to-be without a home. Living the dream, right? Thankfully, I’d just been offered a job as a marketing consultant. I made a modest salary of $50,000 with the promise of a raise over the next few years. That was exciting of course, but now, it was time to start making some big-time decisions. Mainly, where was I going to live?
Lubbock, Texas, the town my quaint, little firm, was located, was considered to be an oasis in the Texas Panhandle. It seemed like a nice place to live, and I was tired of central and east Texas where I had spent the last 22 years. Lubbock sounded like an adventure, and I wanted in. After just one visit, I saw this is actually where I wanted to settle down, have a family, and pursue my career.
But the question remained of how I was to afford a house. Even though it is relatively cheap to live there, my credit score was far too close to my average golf score for me to get a mortgage. So, what was my first step? Like any fresh college graduate, calling my parents was the only natural thing to do. They’re older, they had to know about this stuff!
“Well, take out a mortgage, son,” my dad said. “Go to the bank, shave, wear a suit, and explain to them your situation.”
When I told him my credit score, I heard him sigh through the phone. I half expected him to chew me out like the time I was sixteen and damaged his truck. Instead, he just answered in a soft tone. “I’m not for sure, son. I know a few real estate agents, though. I’ll talk to them and see what they say. Keep making money where you can, and spend it wisely. This debt thing can be a real parasite.”
I told him I knew and hung up. So much for that well of knowledge, I thought to myself. With just a few months before I moved to my new home, I crashed on my twin bed and lay there, staring at the ceiling. What was I going to do? I guess I could rent somewhere, but I wanted to own something and accrue wealth, not just rent like the college student I no longer was. But there’s no way I was eligible for a mortgage, not without an astronomical interest rate, at least. That was out of the question.
As “grown up” as the move didn’t seem, I figured going to the next most logical source of information was my next-best option: Google. I typed in the search bar “how to buy house with bad credit” and hit search. Immediately, I could see I was out of luck. There were a few financial blog pages that popped up first, all telling me pretty much the same, completely obvious things: “Save money, rebuild your credit score,” and my personal favorite, “be willing to pay more money!” I wanted to cry. Not even the internet could help me now. It looked like I was doomed to renting until my credit score resuscitated, and I had saved up enough money to finally make a down payment.
I checked my watch and saw I had thirty minutes until I had to be at work. I changed in a hurry, and made the drive to the Pine Creek Golf Course where I was a glorified maid, so cunningly advertised as a “club attendant.” I had the honor of cleaning up the club locker room after all of the golfers, most old men, were through playing and showering. If I was lucky, I’d get a tip as they were leaving, but it was mainly just a “thanks, son” if anything. I had been there an hour, and found myself mopping underneath a corner locker where a man had elected to practically drip-dry while talking with his buddies.
The mop squelched as I pulled it back and forth, soapy fumes cutting through the Old Spice in the air. The door opened and a middle-aged man with dark hair and a clean face began changing out of a suit at a locker near me. I looked down at his bag and saw the words Greg Damon Financial Advising written across a pocket. Even though I didn’t consider myself to be super religious, I figured this might just be a sign from the guy upstairs.
“You’re a financial advisor?” I asked him, continuing to mop.
He nodded, unbuttoning his collared shirt. “Yes, I am. Greg Damon,” he introduced himself.
“You mind giving a college kid a free consultation really quick?” I asked. It was worth a shot, right?
Damon gave a half-chuckle. “Yeah, why not? What’s the question?”
I stopped mopping and explained my situation to the advisor while he changed. I never made eye contact with him, but he gave the occasional head-nod and “gotcha” or “I understand.” It felt good, really, explaining my situation to an objective party, unlike my parents. By the time I was done he was into his golfing clothes and tying his shoes. He took a deep breath before giving me his prescription.
“Well,” he started. “I take it you’ve never heard of renting to own?”
I cocked my head. “I think I’ve heard of it, but I’m not for sure what it is exactly.”
“Most people don’t,” he said. “Of course, that hasn’t stopped them from entering bad agreements. Anyway, renting-to-own is pretty self-explanatory on the surface. Someone else owns a home, but you are paying them rent to live in it. Typically, there is an agreed upon time for how long you’ll pay rent. At the end of this lease, you’ll have the option to pay the remainder of what you owe on what’s called the “agreed purchase price.” If you do that, then the title is transferred over to you. You rent it, until you own it. Those are the basics of the deal, at least. There’s all sorts of fine-print and options. I’d have to charge you to tell you about those.”
I nodded slowly. I was always leery of things that sounded too good to be true; they usually were. “So, I don’t need a mortgage?”
“No, but you will have to make a down-payment up front. Are you able to do that?”
“Nothing impressive, but yeah, I have a few grand saved up.”
“Well, you might need somewhere closer to ten-thousand in the bank, but that’s a good start.”
“And how do I find these rent-to-own houses? Just Google it?” I asked.
“You can do that, or call a realtor. Here.” He dug into his golf bag and, removing his wallet, handed me a business card which read Lisa Kendricks, Lubbock Realty. “Lisa and I went to college together. She’s great, and can probably help you out better than anyone.”
I looked at him, trying not to smile too big. “Well, thank you, Mr. Damon!” We shook hands and he left to warm up before his round. I pocketed the card and continued my shift, almost giddy to get home and make a phone call to Ms. Kendricks.
♣ ♣ ♣
Lisa Kendricks was more than helpful. She emailed me a link to some houses there in the Lubbock area she was the realtor for. I scrolled through them all at least three times each that day. Each one had their pros and cons. One had a nice yard, but the bedroom and closets were tiny. Another was nice on the inside, but in an ugly part of town.
“These are just a few of the rent-to-own houses here in the area,” she explained to me over the phone. “You can always call another realtor or use the internet.”
“I know, but I want to work with an actual person I know. I’m new to this real-estate thing, and I don’t want to be blindsided by some random landowner.” That was the truth. Deep down, I was nervous and pretty lost. I hated to admit it, but I needed serious help. She understood that logic, and told me to call her again if I needed any more help in selecting a house.
The houses she had sent to me were all had a sale price of around $100k. It was a horrifying amount, I thought. But once we put pen to paper, I realized that, in five years, my credit score would be improved more than enough to get a loan and pay off the rest of what I would owe. After narrowing my options down to two homes over next few days, I called Lisa again to see if she could tell me something that would help me make the decision.
“Have they both been inspected?” I asked. I learned this was essential when choosing a rent-to-own property. I didn’t need any hidden repairs springing up on me, seeing as though they would be coming out of my pocket.
Lisa confirmed they had both been checked out by reliable inspectors.
“Is there anything about either of them that would make me side with the other?” It was blunt, but I needed to know.
“Let me see,” she said before taking a long pause. She broke the silence with an “Oof!”
“What?”
“The down-payment price on the red house is almost double the one on the white. That’s a lot of coin,” she told me.
That conversation settled my dilemma, and, consequentially, decided what house I would be renting until I owned it outright. Lisa said she would call the owner of the house and get things squared away for me.
“So, is that all?” I asked.
“Well, not exactly. We, actually you, still need to negotiate the agreement with the owner.”
Yet another step to this process. “Okay…” I didn’t really know what else to say. “How do I do that exactly?” I felt as lost and stupid as I did at the beginning of the ordeal. Lisa contacted the homeowner and obtained the rent-to-own agreement. I thought all I had to do was sign and the place was all mine, but, of course, I was way ahead of my skis. She set up a phone conference with a real estate attorney in the Lubbock area to look over the proposed agreement.
The attorney, Joseph Thornton, called me a few days later. “You understand this agreement, don’t you?” he asked.
“I…uh… think I do, yes.” Boy, did I sound confident…
“The reason I ask, is that there’s some funky wording in the agreement. Technically, I think it’s fine. But there’s a few lines in here I think need to be changed for the sake of transparency. If something happened to where the owner didn’t give you a proper legal notice, I’m afraid they would be able to get away with it according this wording. By the law, they’re required to give you such notices. Want me to fix it and us propose the amendments?”
As much as I hated paying $225.00 an hour in legal fees, I knew it would likely be worth it in the long run. I told him to do whatever he needed, and to give me a call when it was done. Better safe than sorry.
♣ ♣ ♣
5 years later
I signed the dotted line and shook hands with the now-former home owner of the property I had been renting for five years.
“She’s all yours,” the lady said, shaking my hand and leaving the title company. I looked at the new deed, and couldn’t help but smile. The house was now mine in every way. A homeowner before the age of thirty. That was alright by me.
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