Rent to Own Benefits

 Get into a property that you want with a low down payment.

 Unlike conventional bank financing, any prior credit problems are usually not an issue.

 It's easier to qualify for a Lease Purchase.

 Your entire, upfront option payment is credited to the purchase price of the property when you decide to exercise your option to buy. 

 Part of your rent payment also can be credited to the purchase price of the property if paid on time.

Instead of paying rent and not having anything to show for it at the end of the year, now your rent money is working for you for a change so you can stop throwing your hard earned money away.

 You get an opportunity to get into a home that you can own in the near future, once again for little money down.

 The purchase price is usually locked-in ahead of time before you exercise the option to buy the property.

This way, if the property has appreciated (increased in value), you can take advantage of any increase in equity (which is in this case, the difference between the set purchase price and how much the property has gone up in value by the time you buy the property) of the property.

 You now have time to shop around for the best possible financing for your purchase later.

 If your credit is the problem or you need to save up some money,

you have the time to work on your credit issues and/or save up some money to purchase the property/home.

 It gives you leverage, which is in this case, getting into a home or property that you truly desire with as little money as possible.

 You get a chance to check out all the features and conditions of the house or property.

 Lease purchase puts you in control of a property for a specified time without the responsibilities of home ownership yet.

 Wouldn't it be nice if you can check out the neighborhood to see if you would like your children to attend the schools there or not? What about how close the property is to grocery stores, shopping malls, hospitals and other healthcare facilities, the recreational amenities, upcoming developments in the area, etc?

Lease Purchase gives you the time to do such research.

 You take care of only the minor maintenance, because the owner is responsible for the major maintenance and repairs.

 You don't pay taxes or insurance because the owner takes care of that.

As you can see, Renting to Own beats plain old renting just about any day. Plus, it has some advantages over buying right out.  Set it up properly and you'll be on your way to home ownership and/or investing in real estate sooner and profitably than you thought possible.

What's Involved with a Lease Purchase?

Doing a lease purchase/rent to own transaction means that you are ready to take the first step to home ownership. You are tired of renting and want to stop throwing money away every month, but your current credit or job situation will not allow you to get a mortgage.

You saw the ads for rent to own homes, also known as lease to buy, and you wonder if it is the right decision for you. There are certain things you need to consider before making a lease purchase decision. The most important being what your credit score is right now.

Option Down Payment

In a lease purchase transaction you will be required to do an option down payment. This down payment is known as option consideration and will be applied to your eventual purchase price, or closing costs on the mortgage. Your lease purchase contracts will have two parts to it: a lease contract, and an option to purchase contract.

The option down payment is to secure the option to purchase. You are essentially tying the property up so that the owner can sell to no one else but you at any time during the lease period. In return for the owner taking the property off the market and letting you tie it up, you are paying the option down payment, which is why it is non-refundable.

What are the Benefits of Renting to Own?   

If you are in the market to buy a home, you are probably aware of the advantages home ownership provides (tax shelter, appreciation, security, etc). If you are actively seeking homes for sale on a Rent to Own (also known as Rent to Own) agreement, you are either

1. a very smart renter,

2. a very smart real estate investor,

3. not ready to make a commitment,

4. cannot yet purchase a home through conventional means, or

5. any combination of the above. 

The Rent to Own approach provides you with many features and benefits, but perhaps the most powerful one is the rate at which you accumulate equity. Compare any lender's loan amortization schedule to that of a Rent to Own contract and you'll quickly see that the Rent to Own contract wins hands-down -- every time. Moreover, the buying power of a Rent to Own contract can quickly and easily land you a home that you could only dream of buying the conventional way. 

Features and benefits for the tenant/buyer: 

• Faster equity growth: Equity accumulates much faster (five times or more!) than with conventional financing through a bank or lender. 
• Rent money is working towards purchase: Every month a portion of your rental payment (typically $100-$500) is credited towards your down payment or off of the sales price.
• Option money is credited towards purchase: When you sign a Rent to Own contract, you will pay the seller an option deposit. This money is your vested interest in the home and will be fully (100%) credited to you when you buy the home.
• Minimum cash out of pocket: When you purchase a home the conventional way, you must pay at least 5% down plus closing costs and prepaid fees. When you buy with a Rent to Own, you only pay first month's rent and a small option deposit. This will save you between 25% and 85% every time you buy a home.
• Frequently no down payment at close: Since you have given the seller an option deposit and you have been receiving monthly rent credits, there will frequently be very little or nothing left to pay for a down payment at closing.
• Profits from appreciation: Since the sales price is locked in before closing (as specified in your agreement), any increase in property value will mean that your equity (what you owe minus what it's worth) is increasing in the home.
• Possible sale for a profit: If you are allowed to sell (assign) your option (it will be in your agreement), you may sell it to a third party for a profit.
• Increased buying power: When you buy a Rent to Own home, you can put down as little as first month's rent and a $1 option deposit. Compare that to a typical bank or lender who requires 5-30% down plus closing costs and prepaids.
• Credit problems okay: Qualification restrictions simply do not exist. You will be approved at the sole discretion of the landlord/seller.
• No lengthy escrows or mortgage approvals: Your approval will be based solely at the discretion of the landlord/seller instead of a lender who can take up to a month (or longer) to render a decision.
• Control of the home: You will be put in full legal control of the home for a specified period of time without actually having to own it.
• No taxes, less liability: Since you do not own the home (yet), you will not have to pay property taxes and your liability exposure will be dramatically reduced.
• Quick move in time: You can typically take possession of the home in a week or less, instead of conventional move in times of one to three months, after your offer was accepted.
• Maximum leverage: You are spending very little (or zero) money to control a potentially very expensive, and very profitable, piece of real estate.
• Time: Before you actually buy the home, you will have 3-24 months (depending on your agreement) to repair your credit, find the best interest rates, investigate the home and research the neighborhood and/or schools.
• Minimal maintenance: Large maintenance problems or any maintenance problems that exceed a certain amount of money can be delegated to the landlord/seller.
• Privacy: Your name will not be on the deed or in the public records until you exercise your option to buy.
• Peace of mind: You will have full control of the home and can maintain or improve it however you wish.