Renting-to-own a home can be both financially and emotionally rewarding. In order to ensure your investment has long-term value, there are some things you need to know about and prepare for prior to signing a lease-to-own contract. Let’s discuss some of the most important things rent-to-own home buyers often overlook:
Dont neglect to determine who is in charge of maintenance and repairs:
This information should be determined prior to signing any contract. If the owner is still responsible for general upkeep of the home, then you have that agreement in writing, should they fail on their obligation. Alternatively, if you are responsible, you need to have a good idea of what expected maintenance and repair costs would be and factor this into your rent payments ahead of time.
Don’t overlook the need to hire a home appraisal expert or home inspection:
Many would-be homeowners get caught up in the “rent” aspect of “rent-to-own” and can overlook the importance of getting a home appraised and properly inspected. Remember, this will be your home one day and you need to protect your investment. In addition, this information gives you more bargaining power during the negotiation stage. Arm yourself with as much knowledge as possible to walk away with a good deal.
Make sure you understand what fees will be applied to the final purchase cost of the home:
The fees assessed, and purchase agreement can vary by contract. With some contracts, non-refundable deposits are assessed. However, if you follow-through on your end of the bargain and purchase the home, the deposit should go toward that purchase price. Read the fine print for these details so you understand exactly what will be owed when the purchase term is up. In addition, you need to understand what additional monthly fees are assessed on top of rent, and what percentage of those fees are being accrued toward your purchase.
Consult with experts throughout the process:
While it is possible to handle the entire rent-to-own process yourself, remember, this is a huge investment and you should make sure your assets are protected. It’s better to have a knowledgeable attorney review contracts prior to signing. In addition, having an agent on your side can help you understand what to look for and value in a home.
Prepare a clear timeline of when you can purchase the home:
Rent-to-own homes all have a contract length. At the end of the contract, you’re required to purchase the home or forfeit many fees and deposits you’ve put into the home. Be honest with yourself about your limitations and make sure you set a clear plan for achieving your goal within the lease period. For example, if a poor credit score is preventing you from owning a home, consult with a credit repair specialist who can put a 3 or 5-year plan together so you are on a path of improvement.
We wish you the best of luck!