Rent to Own
Sarah Siddons & Chris Opfer at Home & Garden explain Rent to Own. “You’ve just bought the home of your dreams, signed the contract and packed the moving van — you’re all set, right? Not if you haven’t sold your current home first. So you put it on the market and you wait. And wait. And wait. In many cities where it makes more financial sense to rent than own, buyers may simply not be interested. In others, buyers do come along, but they don’t have enough money saved for a down payment or their credit isn’t good enough. How will you ever sell this house?
“For many, the rent to own home may be the best option. Also called a lease-to-own house, the process works similarly to a car lease: Renters pay a certain amount each month to live in the house, and at the end of a set period — generally within three years — they have the option to buy the house. Each month of rent they pay is income for the seller, while a portion of it goes toward a down payment to eventually buy the home.”
Here’s a typical example from Home & Garden: The house is worth $200,000, and typical rent would be $1,000 a month. Someone who’s renting to own might pay $1,200 a month in rent and then receive a $200 rent credit each month. In the beginning, the buyer pays an option fee. The option fee in this case is $5,000. On a three-year lease, the renter would earn $7,200 in rent credits (200 times 36 months). Adding the earned rental credits to the option fee, the renter has accumulated $12,200 for a down payment. Of course the terms of the sale, rent and rent credit are negotiated.
This is a valuable alternative for buyers who otherwise wouldn’t have the credit score or money saved to acquire their own home. And the sellers, eager to relieve themselves of the burden of the old home, earn this money whether or not the house sells once the leasing period expires.
To make rent-to-own work, potential buyers need to be confident that they’ll be ready to make the purchase when the lease term expires. Otherwise, they will have paid the option money – which could be substantial – and a premium on rent for 12 to 36 months, with nothing to show at the end. If, at the end of the lease term the renter can’t or chooses not to buy the house the option expires. The buyer forfeits any money paid until that point, including the option money and any rent credit earned.
One source of rent to own properties is a real estate investor.
Val Buys Houses LLC. specializes in helping homeowners out of just about any situation, no matter what! There are no fees, upfront costs, commissions, or anything else. Just the simple honest truth about your home. We buy for cash, therefore we can help you sell it fast to resolve any situation, or give you as much time as you need.
We care about our community in Cobb county and Atlanta. At Val Buys Houses LLC we take a lot of pride in providing excellent customer service. We have come across all scenarios, we are not here to judge; only to help.
Give us a call today at 404-844-8845 and let us see if we can help YOU!