The housing market often fluctuates and there are times it is difficult to sell a home. If you are having difficulty selling your home, finding someone who is interested in a rent-to-own property might be the solution for you. A rent-to-own agreement is one that can benefit both landlord and tenant. The following will help you understand what rent-to-own means and the benefits of a typical agreement.
What Is A Typical Rent-To-Own Agreement?
A rent-to-own agreement occurs when a homeowner leases their property to a tenant and provides the option to purchase when the rental period expires. Tenants can pay a fee called option money that secures their option to buy and is based on the home’s value. The amount is later applied as a down payment for the purchase.
Tenants will then pay monthly rent and a premium known as rent credit. This credit is put towards the down payment at the end of the term with the option money. In typical rent-to-own agreements, the fee and the rent credits will not be refunded should the tenant decide not to purchase after the lease expires.
Can You Negotiate A Rent-To-Own Agreement?
The landlord and tenant can negotiate a number of things. Both parties can come to an agreement on how much of an option fee will be required. The rent credit amount can also be negotiated between the two parties. Other areas the two parties can negotiate are the length of the lease and how much the purchase price will be after the lease expires.
There are other issues involved that the tenant and landlord need to agree on. Before the agreement is settled, a decision should be made as to who will be responsible for the maintenance and repairs during the lease. The two parties should also have a plan on paper stating what will happen if the property value changes significantly during the lease agreement.
Other issues that can come up during the lease period are the tenant needing to extend the time before the purchase. It should be decided at the beginning what terms will apply or change if this situation occurs. There should also be an opt-out clause written if both parties agree to it. The opt-out clause will state what happens at the end of the lease if the tenant decides not to go through with the purchase.
Who Benefits More With The Rent-To-Own Agreement?
Both parties can benefit from a rent-to-own agreement. Landlords will benefit from this contract if they are having trouble selling their home or if they purchased a home and are now stuck with two mortgages. The tenant benefits when they don’t have the credit to qualify for a mortgage. The tenant may not have a long enough employment history or they cannot come up with a qualifying down payment for a mortgage. With this type of agreement, unqualified tenants can begin purchasing a home.
The landlord will have the advantage of having a tenant who will want to take care of a property that will someday be their own. The tenant will also have the opportunity to improve their credit. The agreement will benefit both parties, but the benefits will depend on various circumstances.
Not Interested In A Typical Rent-To-Own Agreement? There Is Another Option…
If you do not want to purchase a typical rent-to-own home, IPS Amarillo offers homes through a lease with purchase option. This type of lease is perfect for people that are not sure about buying a home, but also don’t like spending money on rent. If you choose to pay an option fee, it will reduce your monthly payment. If you don’t want to pay the option fee, you will get a monthly credit towards your home purchase.
We have many Available Properties in Amarillo and the surrounding area. For more information about the homes we offer and Lease Options, give us a call at (806) 220-6816 or Contact Us via email. You can also visit us in person at 5701 Time Square Blvd. #340 in Amarillo, Texas.