The rent to own market is one that can benefit both the buyer and the seller in the right transaction. Having a clear contract and understanding of terms helps mitigate risk on both sides of the equation.
Elements of the Contract
There are 4 basic aspects to the rent to own agreement: the option consideration, the agreed upfront purchase price, the lease and the maintenance charges.
The option money is a good faith deposit when purchasing a house generally except it isn’t refundable in a rent to own situation. This is cash given to the seller that permits the buyer the right to purchase the house later.
This option ends if not utilized. The sellers usually keep the option money.
The purchase price is the amount the purchaser will spend for the home once they carry out the option to purchase. Negotiating this cost is difficult since it has to consider the future worth of the house.
It can be tough to know if the housing market will be higher or perhaps lower. The purchaser may choose if the marketplace drops to ignore their choice or try to renegotiate. Sellers will want to work out higher prices compared with the present market price.
The rent is the regular monthly commitment while in the rent part of the lease to own agreement period. While rent is typically higher than standard rent, a portion is sometimes credited towards the purchase price in the home. This may be 25 % of every lease check or whatever is negotiated between the parties.
This option is less often utilized because of recent changes in the tax laws.
Maintenance is a fee some sellers include for the buyer to pay in addition to rent. This would be an additional fee to pay property taxes, repairs, and basic house upkeep. We have seen that buyers opt to find a home warranty company to offset the cost of untimely repairs. This gives the tenant-buyers, and the landlords comfort that the repairs are being taken care of in a skillful manner. The buyers like the fixed cost of repairs usually no more than the price of an estimate for the workman to visit and repair the problem at no additional cost.
Should You Consider Renting to Own Your House in Boca Raton Florida?
While rent to own isn’t really for everyone, it is a great alternative when a purchaser and sellers see the obvious value rent to own. The tenant-buyers get time to fix concerns preventing funding today however still get the great home that their credit or deposit may have stopped them from living in now.. The sellers get option money with the capacity of a future greater value prices.
Purchasers need to work vigilantly to improve their credit and save for a required down payment and be prepared to qualify for a conventional loan by the time the choice is due. Check your credit and talk to a lender early in the rent to own process so you can establish the right components of credit and income to qualify for a loan that buys out the seller at the choice price you agreed on. Your family will thank you for making this happen.
If you’re looking for more information about rent to own properties, we can help.