What are rent-to-own arrangements? A “Rent to own” is similar to leasing a car; - under this lease contract a tenant occupies the house for an agreed upon length of time, with the prospect of acquiring the property at a certain time in the future.
Today, the concept of rent to own has reached new heights of popularity, as potential homeowners have started to understand its pros. Real estate is a high-priced investment, therefore many can’t afford it. It may be because of lack of funds or savings.
A rent to own is basically a specific type of contract that allows aspiring homeowners to apply a fraction of their rent installments towards the purchase price of the property.
The future homeowner acquires the rent-to-own property after the agreed upon period, which can be anywhere from several months to years, or just walk away at the end of the agreement. If this sounds interesting to you, then continue on with this article to take a look at the top 6 perks of a rent to own transaction.
1. Down payment
One of the most appealing reasons people should thoughtfully weigh the rent to own contract opportunity is that there is typically no down payment required, other than a monthly or quarterly rental deposit. Typically, such kind of contracts specify that part or all of the rental payments go toward a cumulative down payment for the tenant, who will use it to buy the property at a later date. You can explore the internet to find some of the best free rent to own contract options in your area.
2. Condition of the property
Years ago, potential buyers had to make one of their life’s largest decisions (acquiring a home) by taking a quick glimpse in one or visits at best. However, with the concept of rent to own contracts online, you can gain complete insight information and the structural condition by living in the home for a considerable length of time. As a renter and a potential homeowner, you can discover what condition the property is in, and whether foundation repairs or other major components of the house like roof condition, the HVAC, etc are needed or not.
3. Fixed selling price
Before inking a rent to own mortgage, a lessee can work with the seller or landlord to determine and fix a selling price of the house. This can also be decided at a later date by a nonpartisan expert appraiser. If you are fortunate enough to lock in a purchase price, you have the edge of managing your financial resources and to improve your credit score for a potential loan. Contractually, the price cannot be changed, neither the monthly payments, no matter how much the area and its vicinity is residentially and/or commercially developed.
4. No commission
Entering into a rent to own contract will offer you the perk of saving on a real estate agent commission. Based on a six percent commission, you can save approximately $12,000 on a $200,000 rent to own property.
5. Control of the house
Irrespective of the condition, whether you have plans of buying the property or not, under a rent to own contract a tenant (or buyer) has full control of the house while paying monthly rent.
After reading through the above mentioned six benefits of a rent to own agreement for a buyer, you can see that there are numerous positives to entering into a rent to own real estate transaction.