There are two components of a Rent-To-Own agreement: 1) a Standard Lease that outlines the monthly rent payment, and other customary lease terms, and 2) the Purchase Option, which gives the Buyer the right to purchase the property at a predetermined price provided the Buyer has complied with the terms of the agreement. For further detail on the specific components of the transaction, please visit our Transaction Overview Page.
Buyers and Sellers have been entering into Rent-To-Own transactions for decades. Recent housing market conditions have, however, put the spotlight on Rent-To-Own transactions. The number of Buyers and Sellers will continue to grow rapidly as the public become more aware of the benefits of the concept, for both sellers and buyers.
Lease option transactions are also known as rent to own, or rent to buy transactions. In a lease option, the landlord-seller leases the home to the tenant-buyer and the tenant-buyer has the option to purchase the home for a pre-determined price at any point prior to the end of the lease. The main components of a lease option transaction are the lease term, the purchase price, the down payment, and the rent credit.
Lease purchase transactions are similar to lease options; however, rather than granting the tenant-buyer the option to purchase the home, lease purchases contractually obligate the tenant-buyer to purchase the home.
Owner financing agreements and land contracts have similar payment schedules to that of lease options and lease purchases; however, these agreements enable the buyer to purchase the home and obtain title at the beginning of the transaction. The seller, instead of receiving a large cash payment at the time of purchase, as he/she would in a conventional sale, serves as a lender for the remainder of the agreement, and collects monthly financing payments from the buyer. When the owner financing agreement or land contract expires, the buyer obtains third-party mortgage financing and fully repays the seller loan.
Rent-To-Own transactions have remained a small part of the overall real estate market. In the past, many of these transactions lacked transparency, and often left unsophisticated buyers unable to purchase the home at the end of the lease term. Additionally, there has never before existed a standardized transaction structure and legal agreement to ensure that these deals are fair, transparent, and simple for Buyers, Sellers, and Agents to complete. At iRentToOwn.com we aim to level the playing field by equipping both sites with relevant information and a transparent process.
The sellers of Rent-To-Own real estate include homeowners, real estate agents, property managers, and real estate investors. You must be an owner or a legal representative of an owner to market a home to our buyers. Houses listed on iRentToOwn have ranged in price from less than $100,000 to greater than $2,000,000. Besides rent-to-own homes, we not also feature six other types of listings: bank foreclosures, pre-foreclosures, short sales, HUD / government foreclosures, auctions and owner financed / for sale by owner. For more detail on all property types, please check out ourHomes Sales Types overview.
iRentToOwn strives to increase the nationwide pool of qualified homebuyers. We are committed to the belief that we can help anyone fulfill their dream of becoming a homeowner. The most typical Rent-to-Own candidate is someone who wants to improve his or her financial profile over the term of a lease, with the goal of purchasing the home at the end of the rental period.
Potential buyers have historically included the following:
No. The seller will grant you the option to purchase the home, but the decision to purchase is entirely up to you.
Too often, tenants bet on the fact they are going to get a raise at work or receive a big inheritance from a relative. Once in a rent to own transaction, the tenant-buyer should set realistic financial improvement objectives and schedule a reasonable timeframe for achieving those objectives. Tenant-buyers should seek assistance, when appropriate, from professionals like credit improvement consultants.
iRentToOwn has partnered with credit experts to help you improve your financial profile over the course of your rent to own lease. You can easily download a free credit score or sign up for a free credit consultation.
A “rent credit” is the portion of the monthly rent that is credited towards the final payment due at the end of the lease on a Rent-To-Own home. The monthly rent credit payments are typically retained by the seller until the buyer exercises her or his purchase option. Savvy tenant-buyers often insist on using an escrow account to protect their investment against a Seller default.
Your down payment and monthly rent credits are non-refundable. If you do not execute your purchase option, this money will not be returned to you. This is one of the critical risks of rent to own transactions, and it is why tenants should be cautious before entering one.
During the lease period, the Seller remains responsible for the mortgage payments, homeowner insurance and property taxes.
Although it is hard to find reliable statistics on the rent to own real estate industry, most experts would agree that purchase rates are very low, likely below 10%. The fact is most tenants are unable to secure a home loan before the end of the rental period. This is generally the result of three primary causes:
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