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