Rent To Own Homes: Pros And Cons
Rent to own home is similar to home sales, it is a way of selling a home over time while the buyer has an option of purchase fully in the future. Property owners who want to sell their homes but could not get it off the market as quickly as possible tend to use this option, the house is leased to tenants who desire to purchase such property but does not have the down payment. Renting to become owners can be simple and a less pricey way to own property. Although, it might seem like an attractive offer it has its pros and cons.
Rent to own homes is a great way to own real estates with little or no stress if you can’t afford down payment for the property. With this option, most people out there have become owners of more homes than they could imagine. Here are some of the advantages:
Purchasing a home can be quite expensive, it requires a down payment which amounts to about 3.5% of the initial price of the property and also a closing cost. Whereas with rent to home option, it’s less pricey. All that is required is an option fee and rental deposits.
Growth IN EQUITY:
With rent to own home option, part of the rent deposit paid by the buyer monthly amounts to the down payment or sales price of the property. So the rent paid is more like an investment made by the buyer.
Full Control Of The Property
With rent to own option, the buyer gets to really look deep into the home, see its flaws, places in need of repairs, places in need of servicing or maintenance and some other home qualities while paying rent. A buyer that purchased the home directly might not get the time to notice all this when purchasing.
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Taxes Are Not Charged And Liabilities Are Minimal
Since the home doesn’t belong to the buyer yet, he is not liable to property tax and this gives such buyer just enough time to make necessary preparations for these expenses in the future. Nonetheless, the buyer still gets to enjoy free taxes for a period of time.
Low Maintenance Fees
Using the rent to own options, buyers are not liable for some expenses above a specific amount agreed upon by the seller and the buyer. That is, not all maintenance expenses are paid by the buyer, the seller also takes up some expenses as well.
The requirement for rent to own home option are not rigid, there is flexibility with credit options and the likes. The buyer, therefore, proves his worthiness through constant payment of rents.
- Defaults in payments of rent or default in the contract between the buyer and the seller, the seller has the right to end the contract if it is clearly stipulated.
- In any case, whereby the buyer is unable to purchase the home at the end of the day, he loses all his money to rent payment. This money could have been utilized differently or maybe saved up as a down payment for other property.
- Buying home using the rent to own option still requires a mortgage loan except if the seller willingly finances the purchase.