Being a homeowner is a beautiful and responsible thing at the same time. It is correct that we spend most of our time outside of the home. Kids go out to play after their classes end, parents work for the entire day, etc. However, our home is the place where we recharge our batteries after a tough day. That is the reason why having one where you can relax is crucial for different reasons.
Of course, purchasing a house at once is impossible in many cases. New houses, as well as apartments, are not cheap. People mostly do not have the money to purchase a new one immediately. That is the reason why they chase the best solution that will meet their requirements and expectations. The option that is becoming more and more popular is Rent to Own homes.
These contracts are not the same as traditional home loans. They are a good option for both parties because it can bring them certain benefits. However, it is also crucial that people understand the potential risks that can occur. That is the reason why we would like to discuss this subject a bit more. We will highlight all the advantages and disadvantages of Rent to Own Homes. After reading our article, you will determine if that option is the right one.
Benefits of Buying Rent to Own Homes
Buyers will get two valuable benefits that they would not get with traditional contracts. First of all, they will manage to buy a house without applying for a home loan. More precisely, if you have a bad credit score, then you won’t even get the necessary amount of money from the bank. Because of that, you will have enough time to improve your credit score and get the loan when you need to purchase the entire house.
On the other hand, you will keep the original price of the house. As you know, the prices of real estate are drastically growing. If the house you plan to purchase costs $50 000, don’t expect the price will remain the same for two or three years. If you sign a Rent to Own Contract, the price can’t change. On the other hand, you have the right to leave the house if the price decreases a lot. Of course, doing that is not going to be a good option always. It will only make sense if you haven’t spent a lot of money before making that decision.
Finally, renting a home before buying it is a good test. At first glance, all the houses look beautiful and comfortable for living. However, that doesn’t mean the same level of comfort will remain forever. You will have enough time to test if everything inside and outside the house meets your expectations. If not, you do not have to buy it and you can move to another place.
Advantages of Selling Rent to Own Homes
The offer of this type makes your home more attractive for the buyers. More precisely, finding a person that will rent is not going to be a problem. You will, sooner or later, see if that person truly wants to purchase the home in the end. If not, you will easily find another one.
That also means that your passive income is not going to stop. People often wait for a couple of months to find the right buyer. However, during that period, they do not have any type of passive income. In this way, you will make some profit until the serious buyer come.
In the end, offering a bit higher price is not going to be a problem. As we said, the opportunity of that type attracts many people. They will not hesitate to spend a bit more on renting your home and raise their chances of purchasing your home in the end.
Disadvantages of Buying Rent to Own Home
As we said, not everything around Rent to Own contracts is perfect. There are a couple of things that buyers and sellers should know. We will primarily start with the risks that buyers need to deal with.
First of all, you need to understand that things are not always going to be like you imagine. Boosting a credit score is a challenging process that can last a bit longer. Because of that, you may not manage to get the bank loan on time. There are different types of unexpected costs that always mess up the plans we have. We hope something like that won’t happen in your case.
On the other hand, you do not have a high level of control. Indeed, you are planning to purchase the property. However, you still don’t own it and you don’t have the control you are expecting to have. For instance, let’s imagine that you want to change something inside the house and make it more comfortable for living. You don’t have the right to do that if the owners of the home disagree. Despite that, you need to ensure that the owner is paying all the property taxes on time. Just because you are renting it, that doesn’t mean the owner is not responsible for them. Because of that, be sure that you cover all the details in the agreement.
In the end, we once again need to mention unexpected costs. Paying the rent on time is mandatory. You may lose the purchasing right if you are late for a couple of days. Ensuring the necessary amount each month is possible. However, it always put you under pressure, and some people simply want to avoid that.
Disadvantages of Selling Rent to Own Home
Uncertainty is the key risk of the sellers because they are never sure that a renter is going to purchase their house in the end. Yet, as we said, finding another one is not going to be a problem.
People that are in a hurry are not going to be satisfied with this option. Getting a large amount of money is not going to happen in this case. You will get part by part until the renter decides to purchase it.
Having enough time to research the home is always good for buyers. However, we can’t say the same for the sellers. The potential buyer could find some flaws in the house that you haven’t noticed. Because of that, it may happen they change their mind and do not buy your property in the end. That is the reason why we recommend you fix them all before participating in the process.
Final Thought
We are sure that you now understand better if Rent to Own homes are a good choice for you or not. Fortunately for you, finding the Rent to Own Homes is not challenging in today’s world. There are many websites like RTO reviews where you can check which options you have. Put all the factors we previously into consideration and try to find the best home for your needs. That is the only way to be satisfied in the end.
Kim Marks