Information on Rent-to-Own Properties

People have asked, “What's the difference between a rent-to-own versus the owner financing?”

The answer – nothing. It’s just about the way you say it and the way it is perceived.

When buying a higher dollar house, buyers are not going to want a rent-to-own situation. Generally speaking, rent-to-own works best when you are dealing with a lower-priced home. The higher the price home buyer would want to go with owner financing… no banks needed and no bank qualifying. Even lease options usually will work better than rent-to-own.

But one important this to understand is that all of these options are basically viewed the same.

A course of action you may want to take is one that is pretty simple. Unless the buyer has 10% to put down, consider doing a lease option. If he/she has the 10% to put down, then you can do true owner financing. This means that there is an agreement for deed or land contract depending on what you call it in your state. It is true that this will keep the seller and the mortgage tied together for a longer period of time. But this method is much more simple. No banks are needed by doing this method.

The most common issue that people want to know about is how much money down. Always remember that every person’s situation is unique. It may be simpler to set a rule of 10% down, or maybe a certain amount, say $10,000. But again, since every situation is different, try asking a few questions to see where that person is at. How much income do they make, have they ever had a home, have they ever had any repossessions and on what. Relay to the potential buyer that the more money they can put down the less the monthly payment is going to be. This is especially crucial if they tell you that their payment cannot exceed a certain dollar amount each month.

In cases when the buyer cannot afford the money down or the mortgage payments, there is the rent-to-own option. When this is done, they buyer actually has the opportuity to live in the house and assess the property over the course of months instead of a few days or a few weeks. The renter and buyer agrees that the price of the home will not change during the course of the lease, and at the end of the lease, has the option to not buy and move out with no repercussions.

Some might say that rent-to-own is nothing more than financing the down payment to get the desired payments. However viewed, it is a useful tool in closing the sale of a home.

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