Renting to Own: How To Make Your Rent an Investment instead of an Expense- By: Karim El Sheikh
Renting to own can sound like a utopian dream in an economy fraught with credit peril and lousy real estate markets. However, a little research and a lot of business savvy can turn your rented home into a owned home, without dealing with a mortgage and turning a monthly expense into an investment.
Before Diving In
In many cases the rent to own options means that you will pay above average rent, with whatever percentage agreed upon going to a down payment on the property. Do not rely on oral or verbal agreements for this. Have both parties (you and the owner), go through a negotiation and contract for an option to purchase or as it is commonly known, a lease option.
Usually the contract will state a price minus the down payment after a significant period of payment. Your lease options are affected by local, state and federal laws so it is best to make sure that the contract is airtight.
In the event that you decide not to go through with it, normally the money goes to the homeowner with a fee. In the event that the homeowner sells before you can purchase, you get the money back. The situation can be tricky without clear cut and legally backed agreements, so one of the ways you can ensure your home is to make sure everything is cut and dried before you even divvy up a portion of your hard earned salary.
Simply making sure you have this protection gives you a certain leeway during the process, where you know you are protected and are not piling money into a hole of no return.
Guarantee A Home to Own Without Breaking the Bank
- Get the home appraised and know your market price. Many home owners are eager to sell or rent to own because of a slow market and may jump at the chance so they can square off their own mortgage. Knowing the home’s worth gives you a bargaining edge if you choose to rent to own. In the event that you receive advice that it may not be the best, follow your gut and your money.
- Have contingency plans for nightmare scenarios such as a sudden foreclosure or the homeowner decides to suddenly sell to someone else. An ironclad agreement will protect you in this case from unscrupulous homeowners who will not think twice about backing down on a deal.
- Make sure your credit is good in the event that you have to take on a future mortgage. If not, use the time to build better credit.
Another way to guarantee that you get a good deal is to go directly to home owners who are interested in renting to own in the first place. While renting to own used to be the option for many with bad credit, it can be a good option for you even if you have the means to take out a mortgage or invest in a home.
These days going for HUD or foreclosed homes is a great option and renting to own is another. Why blow months of rent when you can use it to ensure that you have a home in your name in a few years time?
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Rent to own homes have become increasing popular in a hurt economy. Search all rent to own homes for sale in your area for an amazing deal.