Most people know what ‘rent to own’ means. Companies like Rent A Center and Prime Time have built their fortunes on this concept. Even if this is the only option for some who have particularly bad credit, the majority of other people would not rent merchandise to own it. Homes are no exception, especially if you are buying a home on a rent to own basis.
Even though rent to own may be good for a short period of time, it proves to be an expensive way for someone to buy something they intend to keep. Everyone feels they can afford something for a few dollars a week. Beware, however, of the length of the agreements; most are for 15-20 months, and they are the way for the company to make money. Even a few dollars a week add up to a lot, and usually to over twice the amount the item is worth.
Along with paying rent, you’ll also have to pay applicable sales tax as well. Like merchandise, rent to own real estate has it’s disadvantages. Even if it can be the only way someone with bad credit can buy a house, if your credit is good you are much better off with a regular mortgage. You’ll still have to pay back your lender with a mortgage, although that amount won’t be nearly as high as it would if you decided to get a house on a rent to own basis.
Rent to own properties are usually put on the market by the owners. Dealing directly with the owner can be an advantage. The contract offered will probably start as a regular lease, and then work its way to becoming a rent to own if you decide to stay. At this point, you and the owner will probably negotiate the terms, which will probably go on for several years. Some owners are very flexible and will work with you just to get the price they want for their home, while others will charge you quite a bit more, in order to make a hefty profit.
If your credit isn’t good, then you might want to consider rent to own as one of your only options to buy a property. Although some don’t like to do it due to the price, for many it’s a better alternative than an apartment. Rent to own properties allow you to pay toward something that will, one day, be yours, rather than just paying rent. It works for some people, but make sure you are very clear on the terms before you commit to anything. This way, you’ll know how much you’ll be paying for the home – and for how long.