Basics of the Rent to Own Concept
Rent to own can be an appealing concept for people who are interested in owning a home but have thus far been shut out of the traditional home buying process. Increases in home prices coupled with high-interest rates have left
home affordability at its lowest point in thirty years.
Rent to own is a concept whereby a potential homebuyer enters into a lease purchase agreement that allows them to rent a home for a specific period of time prior to buying the property later.
Reasons to Rent to Own
Reasons a homebuyer would choose the rent to own process include to save for a down payment, or to receive the proceeds of a home sale for use as a down payment, or to correct credit issues that keep them from being able to
qualify for financing. It also allows them to experience a neighborhood prior to making a permanent investment. A typical option period for a rent to own property is usually one to two years, but may be as long as five years.
In addition to standard lease or purchase contract terms, the below items must be considered in the rent to own agreement:
- Is there an upfront option payment to be paid upon signing of the agreement, and how much is that payment?
- What part of that option payment will be applied to the purchase price of the property?
- What portion of the rent, if any, is to be applied to the purchase price?
- Who is responsible for maintenance of the property during the lease term?
- Who is responsible for repairs during the lease term?
From a homebuyers’ perspective, a rent to own contract allows them to make tomorroWs home available today. They can move in, make improvements to the property, gain equity, and have peace of mind that their housing situation is settled.
From a seller’s perspective, a home they have been trying to sell is now under contract, they have income from the lease, and have taken a deposit from the buyer that they may be able to keep in the event they do not complete the
purchase agreement before the lease expires. Additionally, homeowners in pre-foreclosure or active foreclosure are in a compromised position. When faced with a mortgage default, that homeowner will be highly motivated to avoid a bank repossession, which makes an offer for a rent to own contract appealing.
Click on a state below to begin searching for Rent to Own in your area.
RENT TO OWN CHECKLIST
Follow these steps to lease a home with the option to buy and move toward homeownership.
RENT TO OWN STEPS
Follow these step to get a rent to own home and be on the path to home ownership.
RENT TO OWN CHECKLIST
Follow these steps to lease a home with the option to buy and move toward homeownership.
Watch Video
Rent To Own - Basic questions
Learn what rent to own homes are and how to take advantage of this type of real estate in this video.
