Rent to own now is becoming Popular. In this article we will be tackling about rent to own Housing which is nowadays hitting the curiosity of many.
Is it new? Rent to own housing is not a new concept. This approached is being used in real estate for years. However, its popularity diminished during the years of easy mortgage approvals and the run up of home buying in the early 2000’s. Well those days are over. Lenders returned to strict loan approvals, and homes do not sell as quickly and easily as they used to. So, the idea of rent with an option to buy has grown again in popularity.
Why? Rent to own homes offer a classic win-win arrangement for both home buyers and sellers. This is a great solution for buyers needing an affordable and accessible path to home ownership. And sellers get to maintain cash flow, keep the property under careful tenant care, and good value for an investment over time.
WORDS TO KNOW:
“Rent To Own” or RTO is a term that’s well known and used in general, consumer language. Real estate pros prefer to use the terms:
“Lease Option” when referring to these types of real estate arrangements. We’ll use both Rent to Own and Lease Option terms, with real estate agents and brokers, it is best to use the lease option when disscussing to a renter or buyer.
The 3 Pieces of a Rent-to-Own Arrangement
Of course there will always be a paperwrok and agreements to be process whenever youre dealing with real estate, whether your renting or buying your dream house. Buying a condominium, townhouse or single family house share this same reality, as rent to own housing involve paperwork and contracts that cover three topics:
- The Rental Agreement which outlines the terms of your tenancy while renting the property
- An Option Agreement to identify the time period and purchase option fee
- A Sales Contract to spell out the purchase price and terms of sale.
Dealing with multiple contracts is a logical part of the Lease Option process and, when structured correctly, they will provide both the buyer and seller with the protection each party desires for their transaction. And the goodness of agreements for rent to own properties is that they are Flexible and it gives options that best suit both the buyer’s and the seller’s situations! Remember, before moving into a rent to own home, there will already be an agreement with the seller on the home’s sale price and other terms. This is covered by the Sales Contract, Either up front, or over time, the tenant-buyer will pay an option fee to the seller. The option fee is typically non-refundable, though this can be negotiated as partly refundable should the renter not be able to execute the final home purchase.
The Option Agreement will spell out the details for each particular case. Either way, the option fee typically is negotiated to both encourage the buyer to complete the transaction and require the seller to not sell the home to another party. Overall, agreements for rent with an option to buy homes can be written to meet the unique needs of both the buyer and seller. While the Agreements are all based on similar principles, they can be crafted based on the specific terms agreed by tenant-buyer and seller.