Rent-to-own homes present an excellent opportunity for both parties in today's real estate market. If you need more capital or have poor credit, this kind of transaction can be beneficial and give you a chance to own a home that would otherwise not be available. With careful planning and drafting of an equitable contract that protects all involved, it is possible to generate income for the seller while providing savings for the buyer and assuring their interest in the property remains secure.
The landlord/seller typically asks for an option deposit with a rent-to-own arrangement. This can be adjusted or transformed into monthly payments per the agreement's provisions. Often referred to as option money, this helps protect the tenant/buyer's right of ownership at the end of their designated timeline.
The amount of the deposit/option fee typically falls between one and five percent of the property's price. Both parties should agree upon, then document in a rent-to-own agreement, the purchase price as well as any related rental ingredients. This will ensure both sides have security by fixing the cost upfront.
Unlike a traditional renting situation, the seller-landlord receives all payments in full from potential buyers leasing their home. If necessary, they can discuss adding an extra rent premium to purchase said house rather than putting down a deposit.
With rent-to-own contracts, you can establish a longer-term agreement than the typical one to three years. After all, these terms are negotiable! Moreover, an agreed upon price for the sale of property should be established in your contract. To ensure everything is done correctly and wisely regarding wording and drafting of such agreements, consider consulting legal counsel or enlisting a professional real estate agent as they can provide invaluable expertise during this process.
Rent-to-Own agreements can be mutually beneficial; however, it is critical that both parties meticulously research their rights and responsibilities before signing any contracts. Exercise common sense at all times to protect your interests!