Lease-To-Possess Residences: An Integral Viewpoint

In real estate market, the rent-to-own choice is comparable to heading off to check out a film at the cinema. The theater will let you check out the film and experience exactly what it would be like to own it.

In return for acquisition of the property or home, the renter will pay rental payments to the owner throughout the rent-to-own contract term. The owner can certainly demand the renter the current market rate for rentals or even more--commonly $200 to $300 above the present rental price. A part of the monthly rent payment is credited towards the acquisition costs of the property--which is known as a rent credit. Rent incentives could go toward the advance payment or decrease the purchase price, basically making it easier to be eligible for a property loan.

Home buyers

An individual under a rent-to-own agreement is generally termed as a renter or a tenant/buyer. Rent-to-own houses make it possible for purchasers the possibility to reestablish their credit rating during the lease term. Renting to own and making payments on the date specified can pave the way to building a good credit reputation. Some owners require the tenant/buyer to pay for the first month as well as the last month payment at contract signing.

Owners

One significant reason sellers promote a rent-to-own method is usually to prevent having a property sit unoccupied for a long period of time. Rent-to-own leases can certainly last for a number of years. During that point, the owner is a bit more confident that his property will be utilized and also maintained. One more reason sellers go with rent-to-own options is so that they can obtain a greater required price. Since a rent-to-own option is an easy way to get home loan, purchaser is usually ready to pay greater sales value for the simple loan that comes with it. Once a seller thinks about providing a rent-to-own preference, he should study local rental costs for the area of his property or home. Only after that will he determine what monthly rent cost to set up for his assets. Tenants usually tend to be aware of the going price for rentals, and they often forget about houses with too expensive rents.

Different types of Renters

A lot of people would probably agree with the fact that it is more advantageous to be an owner instead of a renter of a house. Tenant/buyers are prepared to pay out the cost for the hassle-free capital they acquire by means of a rent to own preference. An individual who does not yet possess adequate cash to put 10 to 20 percent down on a house purchase, needs time to reconstruct credit to be able to get a home loan, or travels often for business could certainly be potential candidate for rent-to-own. Very few purchasers are able to come up with an initial payment amounting to tens of thousands of dollars to purchase a home. Renting to own provides a tenant/buyer to be able to have a home to reside in, the choice to buy it, and save money towards a future home purchase. An individual who has credit troubles really needs time to correct them by paying off accounts, making consistent on-time payments, and obtaining his credit rating raised higher. The regular business traveler can never be in a single location for very long. Settling on hotels or renting apartments can be costly. A rent-to-own alternative can be the best solution for the business individual who needs a dwelling for a brief time period. If plans change--causing her to need a long term location to live--she may decide to purchase the rent to own house and keep it as a home close to her job site.

Things to consider

The rent-to-own concept is unilateral, which means that it is one-sided. The seller is required to sell the property or home to the purchaser, but the purchaser does not have to buy the property from the seller. In a rent-to-own agreement, the purchaser and seller agree to selling price and terms just before the buyer purchasing the property. The buyer may choose to purchase the residence at the agreed upon price and terms. Or she may simply move away, at the end of the rent-to-own lease term, without any further responsibility. But if she does walk away, she forfeits the rent points she has earned during her contract.

Planning

Getting engaged in a rent-to-own agreement involves planning. The buyer and seller should have a comprehensive mutual exchange of views with regards to the expectations of their deal. For instance, the buyer may be required to execute some of the routine maintenance on the residence during her rent-to-own term. The dollar amount of repairs that the buyer is liable for is usually minimal and fixed before the buyer and seller get into a binding rent-to-own contract. In some agreements, the buyer could be accountable for paying expenses ranging from the first $100 to $500 in house repairs and maintenance expenses. Legal contracts should be drawn up in advance.