With rent to own property, you have the unique opportunity to enjoy the benefits of being both a tenant and a homeowner. Here are some important things to consider when renting a house to own, brought to you from the real estate experts at HomeFinder:
A Rent To Own Home is an Investment
In the case of a traditional rental home, the rent money doesn’t generate wealth as an investment into the home, with an appreciation of its value and profit returns when you sell the house. In fact, this is considered one of the main disadvantages of renting a home. But rent to own homes give you the option to invest in a home if you decide you want to purchase it down the road. As the real estate insiders at FinancialWeb explain, “With rent to own houses, a portion of the rent money goes towards the purchase of the home, making it an easier way for most renters to invest in a home.”
Rent to own houses are also a viable option for people who don’t have the standard 20% of the down payment required for a traditional mortgage. With a lease, you may have more creative options for the money needed upfront if you can show you’re able to make payments towards future homeownership.
You Might Not Need a Good Credit Score
Unlike traditional mortgages, you don’t necessarily need a good credit score for rent to own houses. According to real estate expert Justin Pritchard from The Balance, rent to own homes are an excellent way to rebuild your credit and qualify for a loan in the future. “Buyers who cannot qualify for a home loan can start buying a house with a rent to own agreement,” Pritchard says. “Over time, they can work on rebuilding their credit scores, and they may be able to get a loan once it’s finally time to buy the house.”
When considering a rent to own property, it’s important to understand the difference between contracts. For example, lease-option contracts give you the flexibility to either buy the home when the lease expires or move out without incurring any penalties. A lease-purchase contract requires you to buy the property when the lease is up. Once you learn what your options are, you’ll have a better idea of the risks involved with various rent to own agreements.
You Aren’t Responsible For Property Taxes
Another benefit to renting to own is that the landlord is generally responsible for paying the taxes on the property until the balance is paid in full and ownership is officially transferred to the tenant. This makes it easy for the renter to save money for the additional expenses of future homeownership, such as maintenance, taxes, insurance, and repairs. Even better, tenants can enjoy living in the home while they improve their credit score and save cash for other costs.
Equity Grows Faster Than Traditional Mortgages
Traditional mortgages might be the preferred choice among real estate experts, but rent to own properties actually build equity faster because appreciation typically increases in this scenario. This is because tenants are more motivated to make home improvements as they pay the rent to own payments every month. As the experts at FinancialWeb explain, “When it is time to make the final payment, the purchase price may be much less than the home is worth.”
You Have Full Control of the Home
Even before the tenant has paid off the full amount of the house, they have complete control of the home. This means they can make repairs, improvements, or adjustments as they pay the rent to own payments and live in the home. Rent to own homes also benefit landlords because the tenants are likely planning on living in the house for a long time, so the chances are high that they will consistently maintain and improve the home.
With traditional mortgages and home purchases, closing the deal could take months from the time an offer is received until the new owner can move in. With short sales or foreclosed homes, it can take even longer to close. In contrast, people who enter into rent to own agreements can generally move in within a week or two of closing. This is great news for people who need housing in a short amount of time and don’t want to wait around for months to move into their dream home.
Consider these tips for renting a house to own and homeownership can be a real possibility with properties that offer rent to own purchase options. Find the home of your dreams at HomeFinder, the top-rated online portal for rent to own homes, rentals, and homes for sale.