What is a Rent to Own?
A Rent to Own is the lease of a property with the option to purchase it, also referred to as a Lease Option. The Transaction is coupled with a non-refundable Deposit which is credited to the purchase Price if the Buyer exercises the option to purchase, and is retained by the Seller if not. The Option period is frequently one to three years during which time the Buyer saves up the down payment needed to purchase. The Seller can either provide Seller Financing for the Sale, if willing and able, or the Buyer can obtain a loan.
The Rent to OwnTransaction is becoming a valuable option for many forced to place their dreams on hold following the real estate recession. Owners still struggle to justify selling into a discounted marketplace, believing that if they hold a little longer, value may rebound. And buyers whose savings dwindled or cannot qualify for a loan with stricter lending guidelines, defer their dream of home ownership.
A Market Modulated Model
Fortunately, there's a solution for both parties. A market modulated Rent to Own (the price is set by the market when the buyer buys) is the answer. With the market setting the purchase price when the buyer exercises the option, the Seller gets the appreciation hoped for and the buyer does not pay more than the house is worth. Your Rent to Own can also be structured with a sale price set now if desired. You have both options, to set the price now or have the market set it when the option is exercised.
So, buyers who don't have a down payment or cannot yet qualify for a loan, you can have the home of your dreams. You just need to propose the Rent to Own option to the seller or if you want to buy the house your renting, propose it to your Landlord.