With the shaky economy we live in, who wants to lock themselves into a 30-year mortgage? The idea of dishing out years upon years of money on a mortgage and then losing it all because of a layoff is unimaginable.
It’s the very idea that will keep most of today’s youth far and away from the concept of home ownership. But there is another option people are considering more seriously – rent to own.
About 67% of rent to own customers intend to buy the house when entering the contract. And a whopping 87% actually do make the purchase.
You can find rent to own listings all over the net today, but is it really a good idea? If you’re thinking about traveling down this road, then keep the following information in mind.
Be Prepared to Be a Homeowner
Renting to own a property is the exact same thing as buying a property. You are solely responsible for the upkeep of the house. This means you – not the landlord – are liable for the expenses related to any damage done to the property.
So if you have a leaky pipe, broken HVAC system or faulty wiring, you have to dish out the cash to pay the contractors to fix it. And you have to find these contractors on your own.
Renting to own a house is much different than renting, so it’ll take some getting used to. Make sure you’re ready before you begin looking through rent to own listings.
Make Sure You’re Getting a Fair Sales Price
You have to watch out for lease-option contracts that are trying to take advantage of you. You should expect the sales price to be higher for a rent to own property than one you buy outright with a mortgage.
Think of it like financing a car versus buying it cash. There’s a finance charge. But the finance charges shouldn’t be overly priced. You’ll have to do some market research to determine whether the sales price they’re asking is fair.
Find Out if There Are Existing Liens
If there are liens on the property, run away as fast as you can. You don’t want to end up stuck with a property that can be taken away from you because of a lien you had nothing to do with. Ask the seller, and do your own checking with the clerk of court.
Go Over the Details of the Exit Clause
One way to look at rent to own homes is like this — you’re testing out the merchandise before purchasing. This way, if you run into one too many problems, you can back out.
But in order to back out, you need an exit clause in the contract in the event you don’t want to exercise your option to purchase.
Don’t Go it Alone
Home buying is one of the biggest investments you’ll ever make. For this reason, you don’t want to go through the process alone. Consult with an expert or even hire one to help you with the rent to own process.
Have a Home Inspection Performed
A property may look nice on the outside, and maybe even on the inside. But it’s impossible to know what’s happening behind the walls and beneath the floors.
A professional inspection is warranted before you sign any paperwork. Find out if there are any underlying issues not noted in the contract, such as faulty wires, plumbing, and air ducts.
Be Savvy when Browsing Rent to Own Listings
Shopping around for a new home takes time. Don’t rush into any deals you’re not 100% comfortable with. With the above tips, you should be able to find something within reason.
Owning a home is a part of the American dream, so this may be your chance to get a piece of the American pie!
Have any tips that you would like to add? Leave a comment below.