Buying home with owner financing.?

I am buying a home through owner financing. Please don't tell me not to, I must. The down pay is only $1000.00, and the payments are less than the rent I've been paying on the house. I have been living in the house for 8 months. The seller is well known in the community for buying tax sale properties and reselling owner finance at 10% interest for 20 years. I know several people who buy from him, and he is very patient with people who are late. I need to own my property, because I may be getting a grant to start a wholesale greenhouse and nursery business. My part of the investment is providing the land, the utilities, and the labor.
My question is what should I look out for? Are there particular pitfalls I should look out for? And I can't pay $1500.00 for a title search, can I do that myself & how? I do know better than to do a rent to own. What else should I know?

We have been renting home from man doing rent to own with him. Despite the fact we pay $500.00 month on time, landlord hasn't been paying his $350.00 month for 2 properties & 2 homes. Owner is repoing our part, and selling it to us. I've told him I must own property. The grant is holding on us owning property, and me writing business plan. It is 80% done deal. Business will be nursery business, so I must make sure I won't lose property through stupid mistake. I can't afford title search, but I am good with internet & not afraid of legwork.

Title search and insurance are a must. Without them you could end up losing everything. You can not do it yourself. However, $1500 is too high...

You also need a home inspection by a legit inspector. For all you know the house may be ready to fall into a ravine. If he finds any major problems, you can insist they get fixed before the sale.

10% interest is almost double the going rate. 20 years is a fast pay off. Both are pretty steep and they do not give you much leeway. I also can not believe he is telling you the payments are less than your rent.... Watch out... I smell a rat.

Comparing what you pay to your rent is a mistake. Your rent is rent and that is it. When you buy a house, you have to pay interest, a little on principle, and a bunch to escrow to cover insurance and taxes. If he did not include those in the "payment" he is not acting as an honest lender. I bet by the time you add in the escrow amounts, your payments will not be less than your rent.

And do not forget, you will also have to pay all maintenance and upkeep, something that he has paid up to now. Once you buy, if anything fails, you have to pay to fix it. .

"Patient with people who are late." Yeah.... you pay and pay and then you are late. Read the contract and see how late you can be. This is a classic scam. Here is how it works.

You buy the house. You install new carpeting, paint it inside and out, put in a new counter top in the kitchen, new stove and oven, new bathroom. You are late with a payment but that is OK, he understands. Then you put in a new garage door opener and new sod. You are even later with the next payment but that is OK, he understands. You put in a new water heater and a fancy fire place insert. You now miss a payment. Then boom....he forecloses on you. You are out of the house, he has the house back WITH all the improvements you added. And you can not do a damn thing about it.

How to spot this scam:

#1. If he is unwilling to sell the house if you get the money from a different lender, watch out. He is making the sale contingent upon you getting the loan from him. He has a big BIG conflict of interest there and it indicates he wants to have a string attached to the house so he can jerk it back.

#2. If the contract he is showing you has a "no early pay off" clause or a big penalty for early pay off, then run... He not only is trying to tie you up with him as the lender, but he is making it almost impossible for you to get out from under his thumb. RUN....

I also think you are putting the cart before the horse. You want to buy in case you get the grant. So what if you do NOT get the grant? Do you really want that house if you can not open your business? I would wait to see if the grant comes through then decide what you want to do.

Remember the old story, you can not cheat an honest person and if a deal sounds too good to be true, it probably is.

Spend the money on the title search! An abstract of title should only cost about 150 to 200 dollars. Spend the money on the Title Insurance! This should not be an option! Especially in a tax sale because the seller might not even hold legal title to the property.

You should also spend the money for a property inspection.

Is he actually doing a mortgage or a land contract. If it is actually a mortgage than good. Just remember that no mortgage is to protect the borrower it is to protect the lender.

A land contact is like a glorified lease and don't give you as many rights.

Good Luck,