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- 1/35 35
Active$ 639,900
3 Beds3 Baths2,009 SqFt12857 Glass Beach DR, Rancho Cordova, CA 95742
Single Family Home
Listed by Amen Real Estate
- 1/47 47
Active$ 499,900
3 Beds2 Baths1,668 SqFt10765 Voyiatzes RD, Auburn, CA 95603
Single Family Home
Listed by Amen Real Estate
- 1/38 38
Active$ 399,900
2 Beds2 Baths1,314 SqFt4817 Yosemite AVE, Sacramento, CA 95820
Multi-Family
Listed by Amen Real Estate
- 1/25 25
Price Dropped by $5K$ 169,900
2 Beds1 Bath924 SqFt4375 Shining Star DR #4, Sacramento, CA 95823
Condo
Listed by Amen Real Estate
- 1/34 34
Active$ 494,900
3 Beds3 Baths1,635 SqFt251 Natalino CIR, Sacramento, CA 95835
Single Family Home
Listed by Amen Real Estate
- 1/17 17
Active$ 499,950
3 Beds3 Baths1,437 SqFt3930 Dedication DR, Turlock, CA 95382
Single Family Home
Listed by Hero Real Estate
- 1/36 36
Active$ 585,000
3 Beds3 Baths1,803 SqFt10723 Ivoryton WAY, Mather, CA 95655
Single Family Home
Listed by Keller Williams Realty
- 1/33 33
Active$ 499,888
3 Beds1 Bath1,082 SqFt522 Emperor CT, Manteca, CA 95336
Single Family Home
Listed by BHGRE Integrity Real Estate
- 1/97 97
Active$ 699,000
4 Beds3 Baths2,073 SqFt150 Wayne CT, Vacaville, CA 95687
Single Family Home
Listed by GUIDE Real Estate
- 1/36 36
Active$ 575,000
2 Beds2 Baths1,549 SqFt101 Turtledove CT, Lincoln, CA 95648
Single Family Home
Listed by Coldwell Banker Realty
- 3D
Active$ 244,200
3 Beds2 Baths1,302 SqFt170 W Spring LN, Lemoore, CA 03245
Single Family Home
Listed by Keller Williams of Tulare Co.
- 1/34 34
Active$ 435,000
3 Beds3 Baths1,419 SqFt909 Brierglen WAY, Sacramento, CA 95834
Single Family Home
Listed by Luxe Places International Realty
- 3D
Active$ 348,200
3 Beds2 Baths1,465 SqFt609 S Acacia, Lemoore, CA 93245
Single Family Home
Listed by Keller Williams of Tulare Co.
- 1/61 61
Active$ 689,000
4 Beds4 Baths2,434 SqFt3540 Lani LN, Carmichael, CA 95608
Single Family Home
Listed by Keller Williams Realty
- 1/65 65
Active$ 649,000
4 Beds2 Baths1,460 SqFt2405 Forest Oaks CT, Lincoln, CA 95648
Single Family Home
Listed by eXp Realty of California Inc.
- 1/59 59
Active$ 628,900
4 Beds3 Baths2,045 SqFt8532 HERITAGE HILL DR, Elk Grove, CA 95624
Single Family Home
Listed by Portfolio Real Estate
- 1/39 39
Active$ 620,000
3 Beds2 Baths1,843 SqFt9154 Torino WAY, Sacramento, CA 95829
Single Family Home
Listed by Windermere Signature Properties El Dorado Hills/Folsom
- 1/54 54
Active$ 450,000
2 Beds2 Baths1,190 SqFt1249 Arbor CT, Roseville, CA 95678
Single Family Home
Listed by eXp Realty of California Inc.
Find Your Perfect Rent-To-Own California Home
Many people dream of owning their own home. However, for many buyers, it can be hard to purchase a property outright. This is where Amen Real Estate Services can help with rent to buy houses in Northern California.
If you have an annual household income of $40,000+, a minimum credit score between 580 and 620, and stable employment, we can help you find rent to buy houses in the greater Sacramento area. While standard residential leases have 1-2 years rental rate certainty, right to purchase properties offer five (5) years.
Whatever your situation might be, we have the rent to own houses for you. Contact an Amen Real Estate Broker today to find out more about the wide range of properties available and how we can find the best to suit you.
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Las Vegas Home Prices Slip for Second Consecutive Month in July
Las Vegas Home Prices Slip for Second Consecutive Month in July
Las Vegas Realtors are reporting this week that local home prices dipped for the second straight month, with fewer homes selling and more available for sale. LVR reported that the median price of existing single-family homes sold in Southern Nevada during July was $465,000. That's down from the all-time record price of $482,000 in May and down 3.1% from June. The median home price is still up 14.8% from $405,000 one year ago. August 9, 2022 8:50 AM ET Likewise, the median price of local condos and townhomes sold in July decreased to $271,800. That's down 2.9% from the previous month and down from the all-time record price of $285,000 in May. Condo and townhome prices are still up 21.2% from $224,250 in July 2021. LVR President Brandon Roberts said existing local home prices are still nearly four times higher than during their post-recession bottom in January of 2012, when the median single-family home price in Southern Nevada was $118,000. But since mortgage interest rates started rising in recent months, he said prices have been stabilizing, fewer homes have been selling, more homes are hitting the market and more sellers are lowering their asking prices. "We're definitely seeing a shift in the housing market," Roberts said. "We haven't seen prices slow down like this in several years. And we haven't had this many homes available for sale since the summer of 2019. This is encouraging news for people looking to buy a home - although rising interest rates and today's prices still present challenges for many potential buyers." By the end of July, LVR reported 7,331 single-family homes listed for sale without any sort of offer. That's up 143.8% from the same time last year. Likewise, the 1,618 condos and townhomes listed without offers in July represent a 144.4% jump from one year earlier. LVR reported a total of 2,672 existing local homes, condos and townhomes sold in July. Compared to one year earlier, sales were down 38.4% for homes and down 30.6% for condos and townhomes. With the increased inventory, July's sales pace equates to more than a three-month supply of properties available for sale - roughly three times the supply from earlier this year. So far this year, existing local home sales are down from the same time in 2021. According to LVR, 2021 was a record year for existing home sales in Southern Nevada, with 50,010 homes, condos, townhomes and other residential properties selling. That was the first time the association reported more than 50,000 local properties changing hands in a year, and it topped the previous record set in 2011 by nearly 2,000 sales. By comparison, LVR reported 41,155 total sales during 2020. During July, LVR found that 32.1% of all local property sales were purchased with cash. That's up from 31.7% one year ago. While that percentage has been increasing this year, it's still below the March 2013 cash buyer peak of 59.5%. Aided by restrictions on evictions and foreclosures during the pandemic, the number of so-called distressed sales remains near historically low levels. LVR reported that short sales and foreclosures combined accounted for 0.2% of all existing local property sales in July. That compares to 0.3% one year ago, 1.2% two years ago, 2.0% three years ago, 2.9% four years ago and 6.4% five years ago. These LVR statistics include activity through the end of July 2022. LVR distributes statistics each month based on data collected through its MLS, which does not account for all newly constructed homes sold by local builders or homes for sale by owners. Other market highlights include: The total value of local real estate transactions tracked through the MLS during July was more than $1.1 billion for homes and nearly $171 million for condos, high-rise condos and townhomes. Compared to one year ago, total sales values in July were down 33.1% for homes and down 20.2% for condos and townhomes. Homes have generally been selling faster this year than previous years. In July, 95.2% of all existing local homes and 95.7% of all existing local condos and townhomes sold within 60 days. That compares to one year ago, when 96.0% of all homes and 94.5% of all condos and townhomes sold within 60 days. Written by: WPJ Staff
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How does rent-to-own work?
How does rent-to-own work?
In a highly competitive and quickly changing housing market, those with their hearts set on homeownership may be starting to explore less-traditional options to climb onto the property ladder. One such option is a rent-to-own agreement, a method of buying a house by renting it first. Here’s everything you need to know. What are rent-to-own homes? A rent-to-own home is one that allows for a tenant to rent the property, but also gives the tenant the option to buy it before the lease expires. Through rent-to-own, tenants can effectively test-drive a home, living in it for a period of time before they choose whether to buy it. This can be a great way to find out if you like the neighborhood. The owner of the home, meanwhile, can use the purchase option to lock in a sale price, and also find a high-quality tenant. A typical rent-to-own arrangement has two parts: the rental lease agreement and the purchase option. The lease agreement portion is much like any other lease: It stipulates that you pay a set amount of rent on a regular basis while you live in and use the home, and it sets conditions around that, such as what you can and can’t do to the property. The purchase option gives you the right to buy the home, either during or at the end of your lease. The option spells out how the home’s price will be determined if you decide to purchase it (will it be set at the beginning of the lease or closer to expiration?) and how your rent payments may apply toward the purchase (if at all). You might need to pay an upfront fee to have this option included in the overall agreement, depending on the market. How does rent-to-own work? Rent-to-own is a way to buy a house by renting it first. In many arrangements, some of your monthly rent payment gets applied toward the final purchase price. In effect, you’re making part of your down payment through your rent checks. At the end of the rental period, you’ll have the option to buy the house, usually for a price agreed upon in advance. At this point, you’ll need to get an acknowledgement from the owner regarding the payments you’ve made and what will be applied to the purchase. Then you get a mortgage, just like any other homebuyer. State laws vary on rent-to-own contracts, but typically, the deals can be set up any way the buyer/tenant and seller/landlord prefer. Both parties must agree on the purchase price, which can be tricky when the sale is happening several years in the future. In a rising market, for example, the seller might want the buyer to pay more than the current value of the property. Some contracts state that an appraiser will determine the price of the house at the time of purchase. If this is the case, the buyer/tenant should ensure the contract includes a right to hire their own appraiser, as well as a provision to address what happens if the buyer’s appraisal and the seller’s appraisal differ. In addition, the contract should include whether the buyer is purchasing the home “as is” or if the seller will be responsible for repairs or upgrades. The buyer/tenant then pays for an option as an upfront cost when signing the lease. The option fee typically ranges from 1 percent to 5 percent of the total purchase price. For example, let’s say you enter a two-year rent-to-own agreement. The option fee is 5 percent of the home’s $150,000 purchase price, or $7,500. You’ll pay that amount upfront, and your monthly rent will be $1,500. Your lender will put 20 percent of the rent ($300 per month) into an escrow account during the two years of your lease. When it comes time to purchase, you’ll subtract the $7,500 option fee and $7,200 in rent credit ($300 over 24 months), which reduces the purchase price by $14,700, to $135,300. A caveat about escrow: While the seller might offer up their attorney to handle escrow, it’s best to have your own bank, lender or another third party manage the account, and require your and the seller’s signatures to access it. This can help safeguard the funds. Are you an ideal rent-to-own candidate? “Rent-to-own can be extremely profitable for both parties, but it’s not for everyone,” says Martin Orefice, a real estate investor and owner of Orlando, Florida–based Rent to Own Labs. Renting to own can be a good option for people who want to buy a house but are financially unable to at the moment. It’s best for those who: Plan to stay put for awhile Don’t quite have enough for a down payment right now but are working their way toward it Have a credit score that’s too low to qualify for a mortgage currently Lease-option vs. lease-purchase Two different types of rent-to-own contracts are lease-option and lease-purchase agreements. Here are the obligations and penalties associated with each type. Lease-option When you sign a lease-option agreement, you pay an option fee to the homeowner so you can buy the home at the end of your lease term. The lease will spell out what (if any) portion of the lease option or rent payment will go toward the purchase price. Remember, you can (and should) negotiate the option amount and monthly rent payments ahead of time. In most cases, your option fee goes toward reducing the purchase price of the property. You’ll pay rent during your lease period, and a portion of that rent money typically goes toward your down payment once you decide to buy the home. You’ll work with the seller to agree on a purchase price after your lease expires. This is an ideal option if you’re not absolutely sure in the beginning whether you want to buy the home, because you can walk away from the option if you choose not to buy the property. But the downside is that you’ll give up the option fee and your rent credit. Lease-purchase A lease-purchase agreement is very similar to a lease-option agreement. You still put a certain percentage of your rent payments toward a down payment to buy the home. One difference with this type of agreement is that you and the seller agree to a purchase price ahead of time. You can both agree to a price before you sign a lease agreement, or specify a date for a home appraisal and decide on a price after the appraisal is completed. Another crucial difference: When you enter a lease-purchase agreement, you have an obligation to buy the home at the end of the lease. It’s a good idea to make sure you’ll qualify for a loan during your lease period, because you’ll give up your claim to the home and all of the rent credit you’ve accumulated if you fail to qualify for a mortgage at the end of the lease. The homeowner can also sue you for breach of contract if you don’t buy the home. Pros and cons of renting-to-own Rent-to-own homes have benefits and drawbacks for both the tenant/buyer and the landlord/seller. Buyer pros Rent-to-own agreements can provide you with a path to homeownership if you can’t immediately qualify for a mortgage. If you fall in love with a specific home on the market, rent-to-own ensures no one else can purchase it. Rent-to-own can help you try out a new neighborhood before committing to a purchase. Rent-to-own can cut down on the cost and hassle of moving multiple times. Buyer cons If you don’t ultimately qualify for a mortgage, or nullify the contract by missing a rent payment, you’ll lose the money you spent on the option and on potentially above-market rent. The house could lose value over the lease period. You may have to pay non-refundable fees — such as an option fee — that you won’t get back if you decide not to buy. Seller pros Rent-to-own agreements can attract higher-quality tenants, who likely will also have an interest in maintaining the property. You can collect above-market rent each month, and potentially get a higher sale price when the buyer purchases the property. Seller cons The tenant could decide not to buy the home, leaving you to find another tenant or start the sale process over again. Rent-to-own takes time, potentially several years, which can be a downside if you need money now. You’ll need to vet prospective tenants very thoroughly, which also takes time. The tenant could uncover defects with the property (which are easier to find while living in it) and demand a lower purchase price as a result. In the same vein, the tenant could damage the home or otherwise cause issues on the premises that could create headaches for you as their landlord. How to find rent-to-own homes Rent-to-own opportunities are not as common as traditional rentals or sales, but they are out there. Your best bet is to use a rent-to-own company to find properties with owners looking specifically for tenant/buyers. Here are a few reputable options: Rent to Own Labs Orefice’s Rent to Own Labs compiles listings from all over the country that are available for rent-to-own agreements. You can search by area, and each listing compiles the key stats about the property and its location. Home Partners of America With Home Partners, you find a home you’re interested in and they put in a cash offer to buy it. If the purchase is successful, you sign a one-year rental lease, which can be extended to up to five years at a locked-in rent price. You can decide to purchase the home at any time or walk away at the end of your rental agreement with no penalties. Divvy Similarly, Divvy helps you look for a home. If you qualify for the program, they purchase the home you choose and set aside a portion of your rent to put toward your eventual purchase. Divvy aims to help you qualify for a mortgage within three years. Rent-to-own tips Choose the best terms for your situation Be sure to weigh the pros and cons of both a lease-option and lease-purchase arrangement. If you’re not sure whether you’ll want to buy the home, a lease-option might be the better choice. Consult with a real estate attorney When you’re ready to move forward, consider hiring a lawyer to examine the contract. Among the provisions, it should clearly spell out when rent is due; what, if any, portion of the rent will go toward the home purchase; whether the purchase is truly an option or an ironclad requirement; what appliances come with the sale if you do buy; and who performs and pays for repairs and maintenance during the lease period. Don’t just gloss over the contract Read everything thoroughly, including deadlines and obligations. Learn about the option fee and rent payments, purchase price and how to exercise your intent to buy, as well as pet policies, maintenance details, property taxes and possible homeowners association fees. Make sure you know who is responsible for repairs and maintenance — in some rent-to-own contracts, the renter may be responsible from the start of the rental agreement. Get a home inspection Have a home inspector check out the home before you agree to the purchase price, and ask the owner to pay for it. An inspector can identify any major flaws with a home that will be costly to repair later on, and also protect you against claims for damages if you don’t buy, so this is an important step. What happens after I move into a rent-to-own property? Once you’ve decided to move forward with a rent-to-own property, what happens? You move into your home as a renter — but depending on your agreement, you may have to follow different rules than a typical renter. Be sure to familiarize yourself with your contract. Some agreements may designate the tenant to be in charge of managing repairs and maintenance, as an owner would. (In some states, though, this is illegal.) In addition, make sure you understand the penalties of a late payment. If you miss a rent payment one month, or even if you’re late on a payment, this could be grounds for the owner to terminate your contract. Typically, when your rent-to-own lease ends, you will either have the option of buying the house or be contractually required to buy the house. Either way, make sure you start working to secure a mortgage well in advance. Alternatives to rent-to-own Rent-to-own isn’t a one-size-fits-all solution. If you really want to buy but just need a leg up financially, here are some alternatives: 1. See if you qualify for a low down payment mortgage Traditional advice states that homebuyers should aim for a 20 percent down payment. This can make your offer more competitive and eliminates the need for private mortgage insurance. But it’s still a substantial amount, and there are mortgage options that allow for much less. Some conventional loans allow for 3 percent or 5 percent down with good credit, for example, while FHA loans can require just 3.5 percent down. Remember, a smaller down payment means a larger monthly mortgage payment (and borrowing more overall). But it can be a good option to get you into a home sooner. 2. Consider owner financing Owner financing is an arrangement in which the buyer does not have to secure a mortgage. Instead, the buyer makes a down payment directly to the seller, and signs a promissory note agreeing to make regular payments to the seller until they’ve paid the remainder of the home’s price, plus interest. In effect, the seller is making a loan directly to the buyer. This can be a cheaper and faster way to get into a home, but be aware: The seller could charge a higher interest rate, impose a shorter loan term or both, and may also charge a higher price in exchange for the loan. The drawback for the seller, of course, is that the buyer could fail to make payments. If the seller still has a mortgage on the home and fails to make their mortgage payments because of this, the lender could foreclose on the home, leaving both the buyer and seller out of luck. 3. Practice patience Possibly the least satisfying answer to this question, but still a viable one, is patience. Spend a year or two saving as much money as you can, and you might find yourself able to qualify for a mortgage and afford buying a home more easily. Is rent-to-own a good idea? Rent-to-own agreements might make sense for buyers who are certain that they’ll qualify for a mortgage and can keep the lease limited to a short period of time. This can be an ideal path for those who are on track to pay down other debt and improve their credit scores, or those who need to wait until they have a longer employment history to qualify for a mortgage. Still, purchasing a home through a rent-to-own arrangement comes with risks and expenses that you probably wouldn’t have in a traditional home purchase. “A lot of times, rent-to-own doesn’t lead to purchasing a home,” says Sarah Bolling Mancini, an attorney with the National Consumer Law Center. “It can lead to losing wealth that you otherwise could have put toward the purchase of a home.” Photo By: Weekend Images Inc./Getty Images Written by: Emma Woodward Edited by: Michele Petry Reviewed by: Jeffrey Beal
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What Is Rent-to-Own?
What Is Rent-to-Own?
DEFINITION Rent-to-own allows prospective buyers to lease a property with an option to buy. Definitions and Examples of Rent-to-Own Rent-to-own contracts are alternatives to traditional home loans. At the outset, such arrangements are much like traditional leases landlords and tenants might sign. However, the contract also gives the renter exclusive rights to purchase the home at a specified point in the future. A portion of the money paid upfront and a part of the established monthly rent also go toward the purchase price. Any two parties can enter into such an arrangement, but they sometimes are used as part of housing programs designed to establish affordable housing or revitalize neighborhoods. Updated June 24, 2022 How Does Rent-to-Own Work? The buyer and seller establish a purchase price for the home in their contract. At some point in the future, the buyer can purchase the home for that price—regardless of what the home is actually worth. It's not uncommon to set a rent-to-own home price that’s higher than the going rate to account for projected increases in home values. If the home has gone up in value faster than expected, things work out in the buyer's favor. If the home loses value, the renter can back out of the. Buyers usually apply for a mortgage when the time comes to purchase the home. There are two types of rent-to-own agreements. Lease-option agreements give the option to buy the home at the end of the lease. Lease-purchase agreements establish the obligation to do so. Buyers typically pay an option premium upfront or in equal increments tied in with their rent payments, often up to 5% of the ultimate purchase price. The payment is nonrefundable, but it can be applied to the down payment. Contracts also establish the amount of monthly rent plus the extra amount the renter pays each month. The additional amount is usually credited to the final purchase price, so it reduces the amount of money the buyer has to come up with when buying the home. The extra rent is nonrefundable. It compensates the seller for agreeing not to sell the property to anyone else until the agreement with the renter ends. Contracts should also stipulate who is responsible for maintenance during the rental period. Is Rent-to-Own Worth It? Rent-to-own agreements make sense for some buyers, but not for others. If you have shaky credit or need time to save a down payment, rent-to-own may be the right choice for you. A lot depends on your finances and the state of the housing market. Price-to-Rent Ratio A price-to-rent ratio measures the relative affordability of purchasing vs. renting in a housing market. It is calculated by dividing the median price of homes sold during a specific time period in a particular market by 12 months' worth of the median monthly rent in that same market. For example, the median price of homes sold in the U.S. during the fourth quarter of 2021 was $423,600, while the median monthly rent paid during that same time nationwide in the 50 largest metros was $1,771.12 So, to get the price-to-rent ratio, you would divide 408,100 by 21,252 (1,771 multiplied by 12) and come up with 19.2. The higher the ratio, the more favorable the market is for renting. The lower the ratio, the more favorable the market is for buying. Of course, average home prices and rents vary from market to market, so the national average provides little more than a broad overview. To be accurate, you need to base your calculation on current figures where you are planning to buy or rent. Pros and Cons of Rent-to-Own for Buyers Pros Buy with bad credit Lock in a purchase price Test drive before buying Move less often Build equity in the long run Cons May forfeit money Slow financial progress Less control Home prices may fall Late payments hurt Could be issues with the home Pros Explained Buy with bad credit: Buyers who can't qualify for a home loan can start buying a house with a rent-to-own agreement. Over time, they can work on rebuilding their credit scores, and may be able to get a loan once it’s finally time to buy the house. Lock in a purchase price: In markets with increasing home prices, buyers can get an agreement to buy at today’s price with the purchase taking place several years in the future. Buyers have the option to back out if home prices fall, although whether or not it makes sense financially will depend on how much they have paid under the agreement. Test drive: Buyers can live in a home before committing to buy the property. As a result, they can learn about issues with the house, nightmare neighbors, and any other problems before it’s too late. Move less: Buyers who are committed to a home and neighborhood (but unable to buy) can get into a house they’ll eventually buy. This reduces the cost and inconvenience of moving after a few years. Build equity: Technically, renters do not build equity the same way homeowners do. However, payments can accumulate and provide a substantial sum to be put toward the home’s purchase. Cons Explained Forfeiting money: If you don't buy the home, you lose all the extra money you paid. Sellers may be tempted to make it difficult or unattractive for you to buy so they can pocket your investment. Slow progress: You might plan to improve your credit or increase your income so you’ll qualify for a loan when the option ends, but things might not work out as planned. Less control: You don't yet own the property, so you don’t have total control over it. Your landlord could stop making mortgage payments and lose the property through foreclosure, or you might not be in charge of decisions about major maintenance items. Likewise, your landlord could lose a judgment or quit paying property taxes and end up with liens on the property. The agreement should address all these scenarios. The landlord isn’t allowed to sell while you have an option on the property, but legal battles are always a major headache and expense. Falling prices: Home prices might fall, and you might not be able to renegotiate a lower purchase price. Then you’re left with the option of forfeiting all your option money or buying the house. If your lender won’t approve an oversized loan, you’ll need to bring extra money to closing for a down payment. Late payments hurt: Depending on your agreement, if you don't pay rent on time, you may lose the right to purchase, along with all of your extra payments. In some cases, you keep your option, but your extra payment for the month is not counted, and won’t add to the amount you’ve accumulated for eventual purchase. Home issues: There might be problems with the property you don't know about until you try to buy it—such as title problems. Treat a rent-to-own purchase like a real purchase. Get an inspection and title search before diving in. Rent-to-own deals can be especially risky for buyers, and several scams aim to take advantage of people with poor credit and high hopes of buying a home. Even with an honest seller, it’s possible to forfeit a lot of money if things don’t go as planned. Review any contract with a real estate attorney. Pros and Cons of Rent-to-Own for Sellers Pros More buyers Earn income Higher sales price Invested renter Cons Renter might not buy Earn money slowly Missing appreciation Falling home prices Discovering flaws Pros Explained More buyers: If you’re having trouble attracting buyers, you can market to renters who hope to buy in the future. Earn income: If you don’t need to sell right away and use the money for another down payment, you can earn rental income while moving toward selling a property. Higher price: You can ask for a higher sales price when you offer rent-to-own. People may be willing to pay extra for the opportunity. Renters also get the option to buy the house—which they might never use—but flexibility always costs more. Invested renter: A potential buyer is more likely to take care of a property and get along with neighbors than a renter with no skin in the game. The renter/buyer is already invested in the property and has an interest in maintaining it. Cons Explained No certainty: Your renter might not buy, which means you have to start all over again and find another buyer or renter—but at least you get to keep the extra money. Slow money: You don't get a large lump sum, which you might need to purchase your next house. Missing appreciation: You typically lock in a sales price when you sign a rent-to-own agreement, but home prices might rise faster than you expected. You have to accept this or wait a while to offer the option to buy. Falling home prices: Home prices might fall, and if your renter does not buy, you would have been better off simply selling the property. Discovering flaws: Buyers may discover flaws you never knew about and they may decide not to buy. For example, the plumbing might be adequate for a couple, but not a family of five. Although this defect never came up under the previous living arrangement, it is now an issue you’ll have to fix or disclose to future buyers. Everything is negotiable in a rent-to-own transaction. Both the buyer and seller agree to certain terms, and all the terms can be changed to fit everyone’s needs. Key Takeaways Rent-to-own contracts allow prospective homebuyers to lease a property with an option to buy. The contract gives the renter the option to buy the home at a specified point in the future. Part of the monthly rent goes toward the purchase price of the home, allowing the leaseholder to save toward the down payment. Buyers typically pay a nonrefundable premium upfront, often up to 5% of the purchase price. PHOTO BY: The Balance / Julie BangWRITTEN BY: JUSTIN PRITCHARD REVIEWED BY: DORETHA CLEMONFACT CHECKED BY: KATIE TURNER
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