MOVE IN NOW - BUY LATER, WITH RENT-TO-OWN!
Rent-to-own, often called a lease/option, is a contract under which you rent/lease the home with a future option to buy. It can be a brilliant choice for the family in need of just-that-little-extra-time to qualify for a loan. And with no guarantees in the real estate market, locking-in a purchase price will likely prove to be very advantageous.
We set a purchase price based on the current market value. In the future, when the real estate market rebounds and prices increase, the option will remain to buy at the locked-in price.
The lease-to-own process: We will set a purchase price to the property, and the time frame within which you must obtain bank financing. Then you make an offer for the upfront option-to-buy deposit, and how much you are able to pay monthly for the lease.
Does any of my monthly payment go toward the purchase price?
While the monthly rent payment does not go toward the purchase price, anything paid above it does built equity. These additional payments will be added to your down payment in reducing the balance owed.
For example, if $250.00 additionally paid goes toward your down payment each month, at the end of a one-year term, you will have added another $3,000.00 to your down payment. ($250.00 x 12 months = $3,000.00) Through the rent-to-own process, your down payment will increase as additional payments accumulate each month.
Is a down payment required?
Money down is required, in the form of an Option Deposit. This is applied toward the down payment at the time of purchase. To have an option to buy, you must put money down toward the property, which goes toward the purchase price of the home. Your purchase price then remains locked-in. The size of the option deposit is similar to the size of a down payment, as it ensures the tenant buyer has begun the process of qualifying for a loan.
How much is the Option Deposit?
Often 5-10% is a recommended amount. If there are multiple offers on the property, the size of the option deposit can give a buyer an edge on the competition. A higher Option Deposit amount will give you first choice as homes become available. Also, a sizeable down payment will be advantageous when the time comes for you to obtain traditional financing. The Option Deposit is non-refundable should the tenant buyer choose to move prior to purchasing the property.
A quick example of the Option Deposit process:
A purchase price of $300,000, with a 10% Option Deposit amount of $30,000. The amount due when you qualify for bank financing is: $270,000 ($300,000 - $30,000).
I have horrible credit. Can you help me?
Often, yes. Depending on how much you can afford as a down payment, and how much your monthly income is, we may be able to get you in a property. Then it will be in your best interest to work with a reputable credit repair company to prepare for a future home purchase.
What about utilities?
Tenant buyers are responsible for their own utility costs, as they are in the process of purchasing their own home.
What about maintenance and repairs?
Your new home comes with a 30 day warranty to ensure that everything is in working order. After that, the tenant buyer handles things.
What about homeowners insurance?
Until the property purchase is complete, we will have our own policy, in addition to the one purchased by the tenant buyer.
To learn more about your property goals, click on the WANT TO BUY/RENT/LEASE PURCHASE? button below, and complete the form. We will be in contact with you to discuss options!