A rent-to-own home is a type of arrangement in which a tenant rents a property for a certain period of time, with the option to purchase the property at the end of the rental period. The process typically involves the tenant paying an option fee or option deposit, which gives them the right to purchase the property at a later date. The option fee is usually a percentage of the purchase price and is applied towards the purchase price if the tenant decides to exercise the option to buy.
The most common time to see rent-to-own homes on the market is when the housing market is slow and there are more homes available than buyers. This can allow homeowners to fill their property with a tenant while they wait for the market to improve.
For the homeowner, it is important to make sure that the option fee or deposit is clearly outlined in the contract and that the tenant has the financial means to purchase the property in the future. They should also make sure to keep the property in good condition during the rental period.
For the tenant, it is important to make sure they can afford the option fee, as well as the monthly rent and any additional costs associated with the property. They should also be prepared to purchase the property at the end of the rental period if they choose to exercise the option.
If either the homeowner or tenant changes their mind during the rental period, the option fee may be forfeited.
The Pros of Rent-to-own is that it provides a tenant an opportunity to live in the home they want to buy while they prepare to purchase it. If the tenant has a poor credit history or not enough money for a down payment, rent-to-own may be a good option.
The Cons of Rent-to-own is that it can be difficult for a tenant to qualify for a mortgage at the end of the rental period. The tenant may also be responsible for repairs and maintenance on the property during the rental period and the option fee may not be refundable if the tenant chooses not to purchase the property.
If you have questions about a property you are thinking about selling, or just questions in general, visit us at www.nolabuyshouses.com or give us a call at 504 264 1407