Q:

How does a rent-to-own property work?

A:

Quick Answer

With a rent-to-own property, an individual enters into a contract to buy a home with a lengthy closing date, often a year or two. The renter makes rent payments on the home while using the extended closing date to save up money for a down payment or secure financing.

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How does a rent-to-own property work?
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Full Answer

The buyer advantage of a rent-to-own property is that the individual knows how much the home costs at the end of the closing date. Rent payments can be contributed to the price of the home or a down payment for the home. One buyer disadvantage of this option is that any deposits made on the home may be lost if the prospective buyer is unable to secure financing.

Seller advantages of a rent-to-own property include having a renter who is interested in taking proper care of the home. The seller can also take care of mortgage payments with collected rent. The seller also has a right to request that a potential buyer offer a non-refundable deposit as protection in the event that the sale of the home falls through.

Buyers should ensure the home is being sold at a fair price by consulting with an experienced real estate expert who can run an MLS search. All rent payments should be made in the form of checks so they can be documented, and a home inspector should examine the property to ensure it's in good condition.

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