What is Rent to Own Real Estate?
Rent-to-own real estate is a strategy that allows potential buyers to rent a property with the option of purchasing it within a set period of time. This strategy can be attractive to renters because it doesn’t require them to commit fully to owning a home yet gives them an opportunity to try out life in their dream home. Renters will work with the owner on an agreement to rent the property, and then over time, pay off the down payment for ownership.
There Are Several Benefits To Rent-To-Own Real Estate
Rent-to-own real estate can be a great option for people who want the benefits of owning a home without having to pay the full purchase price upfront. It’s important to understand the risks involved, but overall this can be a great way to get into homeownership.
Also, Rent-to-own real estate can be a great option for new real estate investors, just ask real estate investment expert Ron Neal.
In This Article, we’ll Discuss Several Benefits of Rent-to-Own Real Estate.
Contracts are More Flexible:
Rent-To-Own is a great option if you’re not ready to commit to a long-term contract. This type of agreement gives you more flexibility and control over the length of time you’d like to keep the property.
Rent-to-own contracts offer a lot of flexibility compared to traditional mortgages. This includes the ability to extend or shorten the duration of the contract. You can also choose a short-term contract if that’s more in line with your goals. With rent-to-own real estate, you have full control over when and how long you want to keep the property.
Upfront Costs Are Lower:
You don’t need to make a large down payment to get a rent-to-own property. In fact, with rent-to-own real estate, you can pay a much lower upfront cost.
Most rent-to-own agreements require only a small option fee and the first month’s rent. This makes high-end properties accessible for those with limited or difficult to access resources. You can also choose an agreement that doesn’t require an option fee.
Faster Easier Approvals:
Rent-to-own properties are a great option for people who may not be able to qualify for a traditional mortgage. Typically, the credit score requirement is lower and the tenant does not need to qualify for a loan.
This makes it a great option for those who are looking to buy a home. Rent-to-own leases may have different requirements than traditional mortgages, such as proof of a steady income or job. This can make it easier for those who don’t have good credit history or may not otherwise qualify for a traditional mortgage to own their own home.
No Need For Banks Involvement:
You can work directly with the homeowner, which eliminates the need to get involved with banks or other institutions and their paperwork processes.
This saves time overall and opens up the possibility of negotiating a more flexible payment plan, such as weekly or bi-weekly payments or even being able to add extra payments or accelerate whenever you are ready. It also gives you an opportunity to increase your credit score as you’re paying your rent on time each month.
Lock In Future Pricing Benefits:
With rent-to-own, tenants may lock in current pricing benefits that they wouldn’t necessarily receive by waiting until they have enough cash saved up and can buy a home outright or through traditional financing means when prices could have gone up by then.
The concept of rent-to-own real estate can be advantageous to people who don’t have the credit score, or initial capital needed to purchase the property outright.
Renting a property, while building up a good all-around credit history, allows tenants the opportunity to pay down a portion of the home purchase with their rent payments. Then, when it’s time to make that final payment, tenants can use any accrued rental credits towards the full purchase price of the home.
Talking with a good real estates professional like JKS Realty and Property Management is a great way to get accurate market insights and uncover potential great deals. As well a good realtor will negotiate and structure a sound deal and help put your mind at ease.