In today’s economy, renting to own homes is an excellent alternative for people who don’t have the cash on hand necessary to purchase a home.
Renting to own allows you to rent a home with an option to buy it at some point in the future. If you are interested in renting to own housing, you will need to research and understand this process. It is not as complicated as it sounds and can be done with the help of a real estate agent or broker.
Keep reading for a step-by-step guide on how to rent to own a house.
Find the Right Property and the Right Company
The process’s next step is finding the right property and company to partner with.
You will want to find a house you would like to rent to own and then find a company with properties that fit your budget. Make sure you look at multiple companies to get an idea of what deals are. The company you choose should be reputable and have a good track record. You should be able to quickly search online and see if any complaints have been filed against them.
You should also make sure the company you choose works with rentals to own. Not all companies do this, so you need to be careful.
Get the Necessary Documents Ready
Now it’s time to get the necessary documents ready. Once you’ve found the house and company you plan on renting from, you can let them know you are interested in renting to own and for how long.
You can negotiate a longer time frame, so you have more time to save up for the down payment. You can also negotiate a lower monthly rent to save up more quickly. You will also want to get any credit reports you can. Many companies will require you to get a credit report to prove you are financially responsible enough to rent from them.
Read the Fine Print
A lot of people get caught up in the excitement of renting to own and don’t do their research, only to find out later that a dishonest owner or agent tricked them into a bad deal.
So, before you sign any paperwork, read the fine print. You will want to ensure all details are written in the contract and you understand what they mean. You should also ensure you are on the same page as the owner regarding repairs.
You will also want to ensure rent is agreed upon and due on the agreed-upon day each month. If there are any late fees, they should be written in the contract as well.
Decide on a Price and Date to Buy
Now it’s time to decide on a price and date to buy. You should pick a price that is affordable for you and the owner. If you pick a price too low, the owner may be suspicious. If you pick a price that is too high, you may not be able to save up enough to buy the house at the end of the renting period.
In addition, you should decide on a date to buy. You may want to buy the house after a year, so you have time to save up for a down payment. Or you may want to buy the house after two years, so you have time to build your credit score.
Rent to own is an alternative to buying a home when your credit is less than perfect. You likely won’t qualify for a traditional mortgage if you have blemishes on your credit reports, such as subprime or fair credit. Alternatively, renting to own allows you to improve your credit and build equity without tying up all of your financial resources in down payment and closing costs.
If you follow these steps and do your research, you will be able to successfully rent to own a house.