Rent to own. Lease to own. Lease purchase. Lease option. The concept goes by many names, but the basic idea remains the same.
What is a Rent-to-Own Home?
Renting to own is perfect for anyone who is looking to purchase a home right now but needs time to build up their credit or save for a down payment. When you purchase a rent-to-own property, a portion of your monthly rent is going toward the down payment for the home, working as a kind of built-in savings plan. You agree on a lease term and a purchase price with the seller when you sign the lease. At the end of the term, you have the option of purchasing the home. So the price of the home is fixed, and the seller cannot sell the property to anyone else before the term is completed.
What Are the Advantages of Renting to Own?
For the seller, making your home available as a rent-to-own will:
- Increase demand and interest
- Most likely get you your full asking price
- Bring in a higher-than-average monthly rent
- Attract tenants who would have a vested interest in the home
- Allow you to maintain the tax benefits of owning the property
For the buyer, purchasing a rent-to-own home will allow you to:
- Build up your credit rating
- Save for a down payment
- Use your rent money to work toward the purchase of the home
- Assess the property over an extended period of time
- Be in control of the home without actually owning it
- Profit from any increase in the home’s value
It is important to understand all the details involved. With a lease option, the buyer is not required to purchase the property. However, with a lease purchase, the buyer is committed to buying the property after a certain date that has been agreed upon with the seller. You should certainly weigh your options before you decide which route to take, but especially in today’s market, renting to own can be a very enticing option for both buyers and sellers.
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