Renting to own is a common decision for a person with some credit issues who is seeking a permanent place to live. A standard rental lease is a short-term arrangement that a landlord can terminate at any time, so having the option to buy offers a bit more security to the renter. While a rent-to-own deal is often most beneficial for a landlord, the renter can still take advantage of the opportunity by negotiating to get the best deal possible.
Summary
A rent-to-own (also called "lease-to-own") deal is a real estate transaction between a renter and a home or property owner that provides the renter with a place to live that could eventually turn into his own personal property. The renter must pay a pre-determined monthly rent --- each payment usually includes a portion toward the home purchase price called the homebuyer credit. The sales price is decided and locked in at lease signing. The renter must also pay a down payment besides the security deposit to secure the option to buy at a point in the future.
Get Appraisal
The landlord can propose any selling price he wishes for the rent-to-own agreement, but that doesn't mean that the house value matches his desired price. The proposed renters should ask for a professional appraisal of the home or arrange one himself from a certified appraiser before agreeing on a selling price. The proposed renter can also benefit from a thorough house inspection to determine if the home has any issues that the landlord needs to resolve before commencing with the agreement.
Fee Refunds
The money the renter puts toward rental payments (including the homebuyer credit) and the option deposit is not usually refundable. This is a major reason why a rent-to-own agreement is usually most beneficial for the landlord. Whether the renter stays or leaves, the property owner benefits. So when negotiating a fair rent-to-own deal, the renter should ask for some type of refund in certain cases. For instance, if the lender will not fund the home sale at the price agreed due to a sharp drop in the house's value, that is a cause for receiving at least a portion of the option fee back.
Care of the Home
When developing the rent-to-own deal, the renter can also try to negotiate credits or special terms if she agrees to take on duties that the landlord usually takes care of during the lease period. For instance, the landlord may agree to credit the buyer a certain amount if she acts as caretaker and repairman for the property.
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