I come across many prospective home buyers that often don’t have the credit or funds to become a homeowner in the immediate future.  While most of us do plan to own our own home and think of creative ways to, I quite often am asked do I handle rent to own situations or contracts.

Rent-to-own is when a tenant signs a rental agreement or lease that has an option to buy the house or condo later — usually within three years. The renter’s monthly payments will include rent payments and additional payments that will go towards a down payment for purchasing the home

I personally wouldn’t recommend and actually don’t work the situations, but here are my top reasons why you shouldn’t consider going this route.

Not As Cut and Dry As You Think

While it sounds easy and ideal it often can get tricky. The first person you should contact once you find a seller that is willing to enter into this agreement is a attorney. The attorney will really put together the terms in a contract, lease or an intent to sell. The monies aside from the normal rental income typically will go towards the down payment of the purchase. Staying on top of that is a job in itself and hoping that the seller/landlord is responsibly handling the money paid aside from rent.

What Happens If Things Don’t Work Out

In your agreement, you’ll have a term in which you start the process of purchasing, but what happens if you aren’t ready at that time. What happens if your credit or finances aren’t up to par to obtain financing to purchase?  Will the seller try to keep the monies that are suppose to go towards the purchase or give you a hard time to get out of the agreement. Not fulfilling your end of the agreement can lead to the seller possibly suing you if you don’t end up buying the home in a timely fashion.

Maintenance Of The Property

In the agreement, its always good to list who is responsible for fixing and general maintenance of the home. You should always do your homework and no what condition the property is in. Sometimes, you’re inheriting bigger repairs from a seller that may have not been able to sell the home in a normal situation, so they entered into another agreement to get rid of the home. Be weary of what type of home you’re getting into and problems you may assume before you even OWN the home.

You Miss The Home Shopping Experience

Once you enter into the agreement that house is really where you’ll be staying. I often tell people not to buy a home you may grow out of really fast. Life can always change, and families can grow rather fast. Depending on how long the rent to own agreement is, things may be different 2-3 years later. One of the best parts of buying the home is going out there and looking for the home that fits you. The one with the unfinished space that you can grow into and make your own, or the exact area where you want to be to raise and grow your family.


I hope this gave you a little more understanding as to what a rent to own entails. It may work for you and your situation but I just want to reiterate that this isn’t your only option if your credit is bad or you want more time to save money. If you need help and direction from a credit standpoint, we have the resources to help you repair the issues that are keeping you from buying that home.


Be sure to download our FREE Ebook “12 Month Plan To Buying Your First Home”.






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