What you really need to know about rent to own homes
What you really need to know about rent to own homes
Why are so many people renting instead of buying a home? Due to lower home inventory, rising home prices, and stricter mortgage qualification standards, the rental rates in Tucson show no signs of slowing down. However, some buyers are finding a way around the cost of buying a home now by investing in a rent-to-own home for later. Rent-to-own deals, also known as a lease-to-own, require buyers to pay extra rents each month plus up-front fees of about five percent of the purchase price. The regular rent presumably goes to the owner and the additional payments are used to buy down the price of the home. If this sounds like a to-good-to-be-true option, it’s certainly not without its risks. Here are the pros and cons and what you really need to know about rent to own homes.
Pros
- Buyers having trouble arranging financing can benefit from a rent-to-own lease.
- A rent-to-own lease gives buyers a chance to build up down payments and to improve their credit scores so obtaining a mortgage or future financing is easier.
- Since most rent-to-own contracts are written to close in twelve to thirty-six months, buyers have a chance to experience the home and feel out the neighborhood to make sure it’s a right fit for their future home needs.
Cons
- If buyers fall behind in their monthly payments and are evicted, they lose any up-front fees and rent premiums they paid and their investment is gone.
- Renters may have limitations in modifying their rental since they do not yet own it such as painting or making home improvement upgrades.
- Renters do not build equity while they are in a rent to own lease.
If you choose to invest in a rent-to-own home, Tucson property management companies recommend that you know exactly what you’re getting into. Find out what all your upfront fees and extra rental payments are going towards. Requesting a report or writing two separate checks to track how much you’ve invested towards your down payment is highly recommended. And most importantly, make sure the contract conditions are clear because you’ll want to protect yourself as best possible for increasing home prices, job loss, inability to find financing or anything else that could jeopardize the closing.
If you’re looking to buy a home in Tucson, rent a home in Tucson or searching for a Tucson property management company to manage your Tucson home, please contact the Simply Property Management-Paielli Realty, Inc. Team today.
Greg Paielli
Simply Property Management – Paielli Realty, Inc.
https://tucsonpropertymgmt.com
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