Rent to own transactions are gradually increasing and is becoming a popular way in acquiring a house. This is a convenient way for any person to have a home because it is more flexible than the traditional full payment upfront transaction. But is it really for everyone? Who are those ideal candidates for rent to own transactions?
Basically anyone can take part in this kind of transaction but there are people who are perfect for this kind of trade, here are their characteristics:
People who are willing but not yet able
This option is perfect for those who want to have a home but is not yet financially able. Rent to own will provide them with the time to get their finances in order. By having the “rent with option to purchase deal” they would have locked down their dream home while they save the amount to fully purchase the home.
Strong rental history
People who will be opting for this kind of transaction should know how rent works and must have a good tenant-landlord relationship. For some certain period of time, before the actual purchase takes place, the buyer is still considered as a tenant therefore he is committed to pay monthly rent and must follow the rules and regulations of the landlord.
Has a stable job
Monthly rents won’t come cheap so potential candidates must have a stable job and a steady amount of income to pay for the rent. But don’t worry because there’s a benefit of being able to pay the rent, in this kind of transaction a portion of that rent goes toward the purchase price as credit score or down payment which builds some equity.
Will agree to the terms
Basically the defining characteristic of an ideal candidate is that they can and will agree with the terms. Remember that rent to own transaction is an agreement between the seller and the buyer. There will be certain stipulations like the date that the lease term expires, the purchasing price, rules in the property, who will do repairs, and many more. So even before signing the contract make sure that you can and you will meet the demands of the seller.
Rent to Own is an agreement between a buyer and a seller in which that the buyer will rent the place until a specific future time wherein he/she will have the option to fully purchase the property. Since the buyer is also a tenant for some time period he/she have more responsibilities that are different from the traditional rental system. For those who are interested in Rent to own transactions here are some heads up regarding buyer’s responsibilities:
Pretty much basic in all kinds of financial transactions, payments are needed to be paid. It is the responsibility of the buyer to find proper financing before the end of the rent to own term. The monthly rent also is the responsibility of the tenant but no worries for a portion of that rent will go as down payment that will reduce the purchasing price of the property. Failure to comply can have financial and legal implications.
The task of maintaining the home falls under the care of the buyer/tenant. Since the buyer will likely be the future owner it is imperative that he/ she take care of the property. Although, before the actual purchase had been finalized major repairs are still the responsibility of the seller and minor repairs are the responsibility of the buyer unless of course the agreement says otherwise. Minor repairs include repainting the walls, taking care of the appliances, the lawn, many more.
It is the responsibility of the buyer/tenant to comply with the agreement made and the rules of the seller. The agreement is a binding process that should be followed at all cost to avoid legal insinuations. Up until the time that the purchase is done, the seller is the landlord of the buyer/tenant therefore the rules established by the seller should be followed.
This responsibility is essential for all those who wish to partake in rent to own transactions. Buyers should be deliberate with the negotiations, he/she should learn, understand, and give full consent before agreeing with the terms of the seller. Once agreed make sure that you won’t be violating any terms in the contract so closely supervise your actions. It is advisable to consult with the seller if you’re about to do some changes in the property and make sure the seller agrees before you take further actions.
Rent to own transactions have been fairly increasing in the real estate investment area these days because of the advantages it provides. Many people are starting to appreciate the benefits it can bring to the buyer. Here are some advantages of rent-to-own transaction for the buyer:
Low down payment
In rent to own transactions there are low down payments. All you have to pay for is the option fee which is smaller than the typical down payments.
Part of rent is payment
The rent you pay in rent to own transaction is fairly larger than the normal rent. This is because part of that rent reduces the money/payment needed to buy the house, meaning that the buyer will be able to save a sweet amount of money when he/she decides to buy the property.
Option to buy
Basically, by involving in rent to own transaction, the renter/buyer will have the option to buy or not to buy the property at a specific point of time in the future.
The renter/buyer is the first choice to buy the property. Prospective buyers can’t buy the property from the seller as long as the tenant still has the rent to own concession.
Test the property
By being able to rent the place before actually buying it give the buyer a chance to test the property and if it doesn’t reach expectation then the buyer can withdraw. The buyer may observe and the stability of the property and the living conditions in the area before actually making the purchase.
Lock a purchase price
In rent to own transaction the buyer and the seller will have to decide for a purchase price, that price will remain the same until the tenant decides if he/she will purchase the property.
Major repair responsibilities
Major repairs needed to fix the damages in the home still are the responsibility of the seller until the property is fully bought by the buyer.
Rent to own transactions can be very advantageous for the buyer but remember that these transactions are contractual that legally binds the buyer and seller. So it’s advisable to seek legal advice from lawyers and real estate agents.