Leasing to Own- Yea or Nay

Wake up Wake up, it’s the first of the month. Get that rent check or get out. Okay, you probably couldn’t hear my Bone Thugs and Harmony remix.

Every month when we cut that rent check it hurts, and we are mad at ourselves just a little. You know your blessed to have a place to live. If you’re lucky you love your cozy apartment. If you or you hate giving your money to a landlord that can’t fix your sink, neighbors who don’t curb their dog and somebody who can't work because they play music all day long.

Those are just small problems versus the bigger issue. That is when you are renting, rather than owning you aren’t building equity. You are giving away thousands of dollars to your landlord every month, so they cannot try and make you happy. Plus, you are at the mercy of your rental agreement.

Some people like to rent, others dream of buying a house of their own one day. Unfortunately, rising home prices and a still-recovering job market are making it a struggle for many hopeful homebuyers to get make that leap. Not to mention there may be some credit issues? If you said yes to anything, it may be time for you to think Rent to own.

What is a rent-to-own agreement?

A rent-to-own agreement is a contract that allows a renter to lease a property and, at the end of the lease, have the option to buy it at a predetermined price. The lease agreement normally runs between one and three years, the buyer can purchase the home at any point during the term of the contract. **Be careful, get the contract viewed by a professional

How does it work?

Before entering a rent-to-own agreement, the buyer and seller will negotiate the monthly rent and sale price. A percentage or portion of each month’s rent goes towards the down payment to eventually buy the home. It’s important to remember that once the buyer and seller sign an agreement, the sale price of the house is locked in. This means that even if the housing market fluctuates during the rental term, the original agreed-upon sale price is final. You also need to make sure you can afford the rent and do not be late.

Are there any fees involved?

Of course, this is real estate, and would you really trust something for nothing? In addition to her monthly rent payment, the buyer will have to pay a one-time option fee. Paying an option fee gives the buyer the option of purchasing the house at the end of her lease, at which time the money becomes part of the down payment. But that’s not all. The buyer also must pay a monthly rent premium, which is subtracted from the purchase price of the house at the end of the lease.

Is a rent-to-own agreement right for me?

You have to read every line. Truth be told, many of these agreements are meant to protect the seller and not the buyer. We suggest bringing it to a real estate attorney, housing advocate or even a licensed realtor. Some of these companies who provide lease to own, are just passion along paperwork and have no vested interest in the property. Contracts will let you know whats what.

Anything else I should know?

It’s important to hire an experienced real estate agent to guide you through a rent-to-own agreement. They will be able to help you understand your rights and obligations while protecting your personal interests. Watch out for people hustling homes they don't own. Rent to own programs are already sketchy and they invite other sketchy people. Protect yourself.

What is our opinion?

Do not let not having money for a down payment push you into lease to own. Believe in you enough to do the hard work and do not take short cuts. By giving up the power of the buying process, you are at the will of the property owner. Lastly, chances are you won't even be saving money. The landlord may not be reporting the rent you have paid to a credit agency, so you're credit isn't getting any better either. The risk is to high, come to one of our classes so we can show you how to get into a home for zero bucks.

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