No person in the world hasn’t heard the sentence “renting is equal to throwing money into the garbage bin”. Surely, we are talking about one of the commonest oversimplifications in this world of ours. When you take a look from a proper perspective, you will quickly see that making a decision on whether you should rent or buy is not a simple one. The easiest way we can describe it is that this decision is never black and white.
Deciding this means that you need to go through the shades of gray. It depends on your situation, budget, needs, preferences, and a wide array of other things. Thankfully, there’s a way for you to get the advantages of both of these two concepts. It’s called rent-to-own. It goes like this when you’re paying rent, a percentage goes to buying the property at some point.
Instead of your money disappearing into thin air, you are making progress towards obtaining a property, apartment, or household. Most certainly, there are a lot of people who would like to learn about both the advantages and disadvantages of this concept. Thankfully, there are ways for you to get more info. Now, we would like to walk you through the whole process, and at the end, we will come up with the verdict about whether is it worth it or not. Buckle up and let’s go.
How Does it Work?
As you can presume, this is a process that starts after you sign a contract. To be precise, it starts with two of them. The first is a rental agreement, and the second one is an option to buy. We would like to discuss both of these.
The first part of the process, the rental agreement, is pretty similar to the standard lease. Chances are that it will be two or three years long. Most certainly, there are a couple of conditions and terms you will need to meet. Of course, they are decided on by the owners of the apartment or a house. For example, you are not allowed to have pets, some occupancy restrictions, and smoking is forbidden.
Naturally, breaking one of these rules and you will be forced to leave. Plus, there’s a risk you will lose the money you’ve paid in advance and the money you’ve spent so far. At the same time, this agreement will decide on your other obligations. The commonest one is that the tenant needs to take care of the maintenance and other general things already done by the owner.
It’s needless to say that the owner will need to be involved in all these processes, mostly during the repairs that represent big damage inflicted to the property. Surely, signing this contract will be enough motivation for you to fulfill all these obligations since you have the chance of owning that property in a couple of years.
Option to Buy
Option to buy is a second element of the contract. As you can presume, an option to buy the property is valid as long as the contract lasts. At the same time, nobody will be able to get in front of you and buy it during this period. When it comes to the option fee, it usually goes between 2% and 7%. In case you give up on purchasing the property, you will lose all the money you’ve invested so far.
Depending on the contract you’ve signed with an owner, you will be able to change some clauses. However, this is not a common occurrence. Of course, you will always have the chance to pay the required amount at once and purchase the property at once.
What are the Benefits of Rent-to-Own Housing?
Now, we would like to talk about the benefits you can expect from rent-to-own housing. Let’s take a look at them.
Credit Score Doesn’t Matter
In case you don’t have a perfect credit score, you shouldn’t be too distracted by this fact when deciding to opt for a rent-to-own. The reason being the whole process is more like a mortgage payment than any other concept we can think of. At the moment of the last payment, the owner activates the credit established with the tenants and transfers the deed.
Because the home is still owned by the landlord, tenants are not responsible for taxes, until the balance has been paid completely. Surely, this is a perfect opportunity for the tenants to accumulate the capital until the moment they are owners of the property. At one moment, it will come useful for future works on the household, you can be certain about that.
After tenants move into the house, they are in complete control. What does it mean? They can perform any kind of improvements and adjustments they would like to do. Surely, they will not invest their capital into the house they will not live in after some time. Instead, they are investing in the future. Plus, the owner will not need to worry about the potential damage inflicted to the house.
In any other process than rent-to-own, it takes quite a lot of time to finish the procedure. Let’s say it can take a couple of months before the offer you’ve made is accepted by the owner and you are ready to move in. With rent-to-own, the whole process will last up to two weeks, which is surely a pretty good thing. When we say this, we mean about all the documents and other parts of the deal.
Of course, any decision about whether you want to buy a certain property is made entirely by you. So, you will need to take a serious consideration that will include finances, preferences, and needs. As you can see, there are a lot of things you need to take into consideration. All-in-all, in case you have considered all the factors, opting for rent-to-own is a sure way to go. Here, we’ve provided you with a walk through the whole process. You will not be sorry for making this decision.