Most people think that there are only two options of living arrangements. You can either buy a home, or pay rent to live in a house or apartment. However, most people are wrong.
There’s actually a third option called rent to own. These deals typically require buyers to pay a little extra rent each month, as well as additional up front fees. The regular amount of rent goes in the owner’s pocket, as it typically would, but the extra rent to own payment are used to buy down the price of the house.
Though such an option might seem strange, rent to own actually has several advantages. Here are just a few.
Build Up a Down Payment and Improve Credit Profiles.
Rent to own deals allow home buyers to build up their down payments, as opposed to paying them in a lump sum, and improve their credit profiles, too, which makes it easier to obtain a mortgage.
Get a Feel For the House Before Committing to It Fully.
Another great reason to choose a rent to own option is to get a feel for the house before fully committing to it. Contracts are typically written to close between 12 to 36 months, which gives the tenants enough time to get a feel for the house and decide if they’d like to make it their home. They get to live and experience the neighborhood and area without having to make any major commitment.
Score a Great Deal If the Property Value Increases.
Another huge advantage is the chance to get to get a better deal in the long run. If the home’s value increases more than expected, then the seller loses out on that profit. For example, a rent to own home is valued at $250,000, and the buyer and seller agree to a purchase price of $265,000 in three years, but if the home is worth $280,000 in three years, the seller loses out on the extra $15,000.
Instead of searching for local houses for sale, why not search for rent to own homes? That way, you can build up a down payment, get a feel for the house, and maybe even score a great deal. If you have any questions about the advantages of rental homes, feel free to ask in the comments. More information like this.