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How Does Your Rent to Own Program Work?

It's simple.  There are two types of rent to own programs, lease purchase or lease option.  The terms "lease option" and "lease purchase" are sometimes intermixed, but they are different.

Lease Purchase
At the end of your lease agreement, you purchase the home.  It is a contract to buy with a delayed closing date and a lease to cover the issue of possession.  This type of agreement is the same type of lease purchase program offered by licensed real estate brokers.

Lease Option
At the end of your lease agreement, you have the OPTION to purchase the home.  It is a contract to buy with a delayed closing date and a lease to cover the issue of possession.  But, you are not obligated to buy the home.

Depending on your situation, there are advantages and disadvantages to both programs.  So, ask the property manager or owner how their program is structured.

A rent to own program is more valuable than just simply renting.  You don't have to bother with banks, mortgage brokers, or real estate agents.  You can enter into a rent to own agreement directly with the property owner and just deal with them at the end of your agreement. 

Rent to own home programs are rare and vary among investors.  Most investors want to hold onto their properties for the long term.  They want you to pay their mortgage.  But, with a rent to own home, you are given the ability to build equity while you rent.  Getting into a home with a low down payment will help you repair your credit (if needed) and build valuable equity in your home during your lease agreement period.

You are purchasing the home from the owner now and delaying the closing to a later date.  This is the main difference between you and a typical renter.  A renter has no rights to the home when the lease is up.  At the end of your lease, you finalize the home purchase and use any equity you built up towards the purchase price.

Are you ready to buy a home?  View our current listings by clicking here.

If you don't see a home that meets your criteria, please provide us with your e-mail address and we will notify you when we have new listings.

E-Mail Address:

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The Fundamentals  of our Rent to Own Program

Agreements:
The program usually involves two separate agreements.  A "purchase and sale agreement" and a "lease agreement."  The purchase and sale agreement covers the home's price, the closing date, taxes, termite bond, title exam, warranty deed, and possession.  The lease agreement handles occupancy, rent amount, move in date, property visits, prorated rent, pets, and maintenance.

Timeframe:
Typical agreements are 2 to 3 years in length.  But, if you need more time (e.g., to repair your credit history) your agreement could be extended.

Rent Credit:
A "rent credit" is a percentage of your rent every month that is usually applied to the purchase of the home.  It's usually about $100 of your rent payment per month.  A rent credit can be negotiated in your agreement and is not always included.

Purchase Price:
Some investors set the price of the home today and some set it at the current market value when the lease agreement is up.  This usually depends on the market in your city.  Typically, the price is set today.  This way you will know the exact price of your new home.

Earnest Money:
Your earnest money deposit could be applied 100% towards the purchase price of the home.  If your earnest money deposit is $5,000, then all $5,000 could be applied towards your home purchase. 

Your earnest money deposit is usually non-refundable.  So, if you decide not to purchase the home, you forfeit your earnest money.  This is the same legal practice when you purchase a home the conventional way.  You put up earnest money to purchase a home and if you back out of the sales agreement, you lose your earnest money.

Process Overview:

• Review the current listings
• Contact the person who posted the listing
• View the property
• Complete an application
• The property manager or owner will process your application
• You will review the paperwork with the property manager or owner and sign the agreements
• They will then collect your earnest money, rent, and application fee
• They will give you the keys and help you transfer the utilities into your name
• Periodically, if needed, the property manager or owner may council you on ways to improve your credit
• 60-days prior to the end of your agreement, you should notify the property manager or owner in writing whether you will complete your home purchase or if you need to extend your agreement
• Then you will either close or extend your agreement.

You are not renting the home, you are buying the home.  Let us help you own a piece of the American dream - owning a home.

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Rent to Own Program Benefits For You

A rent to own program offers many advantages over bank financing:

Faster Equity Growth:
Equity can accumulate much faster with rent credits than with conventional financing (loans).  With a conventional loan, 99% of your mortgage payment goes toward the interest payment for the first 5 to 10 years.

Your Rent Money is Working Towards the Purchase of the Home:
Each month that you pay rent on time, a portion of your rent payment could be credited towards the home's purchase price.  So, you could build equity.

Your Earnest Money is Credited Towards the Purchase of the Home:
When you execute (sign) an agreement, you must pay earnest money (also known loosely as a "down payment" or "deposit").  This money is your vested interest in the home and could be credited towards the home's purchase price.

Minimum Cash Out of Pocket:
When you purchase a home conventionally, you must pay closing, prepaid, and down payment costs.  With a rent to own agreement, you only pay the first month's rent and earnest money.  This will save you between 25%-85% (1,000's of dollars).

Purchase Price is Locked In:
Typically, the home's purchase price will be locked in for the duration of your agreement.

Profits from Appreciation:
Since the purchase price could be locked in before closing, any increase in property value will mean that your equity will increase in the home.

Buying Power:
Your buying power is drastically increased.  You can get into a rent to own home for much less than what a lender requires (10 to 20% down plus closing costs and fees).  This saves you 1,000's of dollars up front.

Rent to own advantages over a conventional mortgage:

Category	Bank Loan or Mortgage	Rent to Own Program
Down payment:	typically 10 to 20% down	typically 3 to 5% down
Closing costs:	between $2,500 and $5,000	small application fee (under $50)
Credit:	penalties for bad credit	your credit is not an issue
Move-in:	at least 30 days	Less than 2 weeks
Payment plan:	no customized plans	custom payment plan to fit your needs
Escrow account:	mandatory account	no escrow account required
Payoff:	slow for the first 10 years	accelerated equity builder
PMI payment:	required if less than 20% down	no PMI payment

Credit Problems Will Not Hold You Back:
Qualification restrictions are nowhere as strict as conventional financing.  You will be approved at the owner's sole discretion.  In fact, a rent to own a home can be easier then renting a home!  Your earnest money gives the "weight" in the transaction.

Click here for a free guide on how to understand your credit score.
Source: FairIssac
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You Get to Keep the Value You Add to the Home:
If you make improvements to the home that will increase its value, it's yours to keep when you purchase the home.  So you can landscape, paint, upgrade, even add on to the house.  It will all be yours.

No Taxes, Less Liability:
Since you do not own the home yet, you won't have to pay property taxes.

Maximum Potential:
You are putting out very little money to control a very expensive and potentially, very profitable investment.

Time:
Before you actually buy the home, you will have time to improve your credit, be on your job longer, save more money, or find the best financing available.

Quick Move-in Time:
Move-in time is typically less than two weeks compared to a conventional home purchase which could take 1 to 3 months from the time the offer was made.

No Lengthy Escrows or Mortgage Approvals:
The decision to sell the home to you will be made at the sole discretion of the home owner, rather than by a lender who can take up to a month (or longer) to render a decision.

Privacy:
Since you are leasing, there will be no public record of where you live.

Peace of Mind:
What you're paying per month could actually go towards something - your home and your future.

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Why Would I Want to Work With You?

Our business partners (i.e., real estate investors) are looking to work with individuals and families who are interested in a rent to own home program to repair their credit and purchase a home.  We want to assist you with acquiring a quality home that will provide you with security and a valuable asset.

The process of renting a home to own is fairly simple.  The property manager or owner will work with you to discuss their process before any documents are signed.  They want to ensure you understand the process, the benefits, the costs, and the end result - full ownership of your new home.

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