Why Consider a Rent to Own

If you are tired of throwing your money away on rent, been turned down for a loan due to poor credit, or don’t have 3% - 20% for a down payment, then rent-to-own (sometimes referred as “lease option”) is right for you.

It is more difficult today than ever to purchase a home. Nothing down home loans are a thing of the past. How long would it take you to save 3% - 20% for a down payment to purchase? How much rent money are you wasting while trying to save? I can put you into a home in as little as 24 hours using a Rent to Own. I can even show you how a Rent to Own transaction can be financially better than purchasing a home today!!! You won’t believe it!!!


Why Is Renting To Own Advantageous

Let’s face it, banks are not flexible. If you do not meet their guidelines they will not finance a home purchase for you. Sellers are flexible, especially if they have a vacant home that they are making mortgage payments on. This flexibility can put you into a home that meets your needs with a financial plan to ownership within 2 years.


Key Reasons to Rent to Own Now

  1. The main advantage of doing a Rent to Own, or Lease Option, is that at the end of your lease, should you decide to purchase, any and all equity that you've accumulated while renting can be applied as a reduction in purchase price or towards your down payment when you buy. As long as you have made 12 consecutive rent payments, Lenders can consider your loan a "Refinance" rather than a typical "Purchase", which means you can not only use your equity as your down payment, but you'll also get a much lower interest rate, and payment, than if you came to the table with no down payment!

  1. For very little money you are controlling a very expensive, and potentially very profitable piece of real estate. The property owner cannot sell or rent the home to anyone else during the contract period. If you choose not to purchase the home at the end of the term you can assign the agreement for a fee or sell the property. That’s right! You can sell the property and any proceeds earned over your net purchase price are yours to keep!

  1. Your monthly payment under a Rent to Own is almost always less than the monthly payment if you purchase today, while your monthly rent credits are almost always double than the equity earned if owned today.

These are only a few keys reasons to consider a rent to own. Please visit the page title “Benefits for Tenant/Buyer” to the left of this page for a full list.


How Can a Rent to Own Be Financially Beneficial Over Purchasing Today?

Let’s assume you have the ability to purchase a home today (perfect credit and have at least $20,000 in the bank to cover the minimum required down payment of 3% and closing costs), but are curious how a Rent to Own would compare.


Here is the scenario:

The homeowner would sell you the home today for $290,000 or would offer to Rent to Own the home to you for $5,000 down as option consideration(100% credited back towards the price of the home), $1,600/month, $400 of which would be credited towards the price of the home, and a purchase price before credits of $304,500 after 24 months.



RENT TO OWN PURCHASE SAVINGS
Down Payment $4,500 $8,700
Closing Costs $0 $8,700
1st Month Rent $1,600 $0
Security Deposit $500 $0
Initial Cash Outlay $6,600 $17,400 ($10,800)
Monthly Payment $1,600 $2,040 ($440)
Annual Purchase Analysis
Year 1
Monthly Payments $19,200 $24,484 ($5,284)
Net Purchase Price $287,450 N/A
Estimate Home Value $301,600 $301,600
Equity Earned $14,150 $14,896 $746
Total Cash Outlay $24,200 $41,884 ($17,684)
Year 2
Monthly Payments $19,776 $24,669 ($4,893)
Net Purchase Price $285,231 N/A
Estimate Home Value $313,664 $313,664
Cumulative Totals
Equity Earned $28,433 $30,469 $2,036
Total Cash Outlay $43,976 $66,553 ($22,577)
*Disclaimer: The figures used above are for comparison purposes only. Actual results will vary based on actual market conditions and buyers ability to execute the option to purchase.

Your net purchase price at the end of 2 yrs would be $285,231, which is $4,769 less than if you purchased the home today. Assuming a low appreciation rate of 4% per annum the home would be valued at $313,664 at the end of 2 yrs, which would earn you $28,433 in built in equity. Best of all you would have saved $22,577 in total cash outlayed.  How? You save $10,800 from the lower down payment and you save $440/month because the rent to own payment ($1,600) is less than the purchase payment ($2,040). Which option would you choose?

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