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?
- 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