Are You Considering a Rent-to-Own Transaction?

Rent-to-own options are becoming popular again after falling out of favor during the last couple of decades when mortgages were easy to get.

The advantages of rent-to-own to buyers include a way around poor credit, an opportunity to rebuild credit worthiness and a way to try out homeownership without making a costly commitment.

For sellers, it offers cash flow from properties that might otherwise just be sitting there.

Consider these important questions before stepping into a rent-to-own transaction.Buyers:

  • How much of the rent is going to the down payment?
  • How locked in are you if you change your mind?
  • What will it cost you to get out of the deal?
  • How long will it take to accumulate enough of a down payment that you are likely to qualify for a mortgage?

Sellers:

  • Who will tend to the property and pay for routine maintenance?
  • Who pays for major repairs?
  • What are the costs of setting up and managing an escrow account for the portion of rent allotted to the down payment?
  • Will you manage the property yourself, or hire an agent?
  • What if the renters change their minds? Who keeps the money in the escrow account?
  • If the buyers change their minds, what will be required to put the property back on the market?

Article Source: Boston Globe, Robert Preer