Are You Considering A Rent-To-Home?
Rent to own may be a great option for someone who does not have the capital to purchase the home right away, but wants to continue living in the same place for a period of time. Think of a car lease… You pay a monthly fee to use the car and you have the option to buy it out right after your lease is up. With rent-to-own part of your monthly rent will go towards paying off the home you are currently living in. This helps to ensure that you are not entirely throwing your money away on rent and that a portion of it is paying off. There are many different factors to consider with a rent-to-own property and we will discuss those advantages and disadvantages in this article.
Advantages of Rent-To-Own:
One big advantage and reason why people opt for the rent-to-own option is that they don’t have the capital to buy a new home or they could have poor credit, not a high enough income stream, or they cannot come up with the down payment. If you fall into one of these categories than a rent-to-own option might be the perfect solution for you! Not only will you live in the house and experience what it is like before you buy it- but you will have the option to see if you really love it and think it would be a good investment moving forward. You get to experience it hands on before committing fully. For sellers, this option can be great for owners who are having a hard time meeting the mortgage payments. Sellers will then offer rent-to-own options on their place.
Disadvantages of Rent To Own
One big disadvantage to the tenant who was thinking about purchasing the home after and decides not too is that they do not receive the extra money that they put into the rental. If the tenant decides they do not want to buy the property, the extra money does not return to them. Usually, with a rent-to-own option, the tenant is paying more for the rental property than market value. This is because they are paying off part of the capital of the home.
Always make sure to read over the agreement with the property and make sure you are not locked into something that you are unaware of. Some contracts are worded so you are obligated to purchase the property at the end of your lease. Many tenants end up not purchasing the home for the same reasons as before and the owner walks away with a lot more capital than they would with a monthly rental that is not part of a rent-to-own agreement.
Depending on your situation, it can be beneficial to some if you understand what it all entails. Always read over EVERYTHING and make sure it is clear to you!
Advantages of Rent-To-Own:
One big advantage and reason why people opt for the rent-to-own option is that they don’t have the capital to buy a new home or they could have poor credit, not a high enough income stream, or they cannot come up with the down payment. If you fall into one of these categories than a rent-to-own option might be the perfect solution for you! Not only will you live in the house and experience what it is like before you buy it- but you will have the option to see if you really love it and think it would be a good investment moving forward. You get to experience it hands on before committing fully. For sellers, this option can be great for owners who are having a hard time meeting the mortgage payments. Sellers will then offer rent-to-own options on their place.
Disadvantages of Rent To Own
One big disadvantage to the tenant who was thinking about purchasing the home after and decides not too is that they do not receive the extra money that they put into the rental. If the tenant decides they do not want to buy the property, the extra money does not return to them. Usually, with a rent-to-own option, the tenant is paying more for the rental property than market value. This is because they are paying off part of the capital of the home.
Always make sure to read over the agreement with the property and make sure you are not locked into something that you are unaware of. Some contracts are worded so you are obligated to purchase the property at the end of your lease. Many tenants end up not purchasing the home for the same reasons as before and the owner walks away with a lot more capital than they would with a monthly rental that is not part of a rent-to-own agreement.
Depending on your situation, it can be beneficial to some if you understand what it all entails. Always read over EVERYTHING and make sure it is clear to you!
