If you can’t afford to buy the property now, rent to own may be the right option for you. Don’t let insufficient funds become the reason to stop you from living in the house you want to buy. Keep reading to discover why the lease option or rent-to-own can help you in your homebuying journey.

Rent to Own- an Overview

The arrangement in the "rent to own" or transaction process is not much different from the traditional method. However, the main difference is that the buyer’s agreement in the lease option is for a specific period.

Typically, the period ends between one and three years. That is why you must know the rental period duration before signing the deal. Another feature that makes a rent-to-own agreement different is that the buyer can buy the property once the lease ends. In many cases, the renters are obliged to accept the rented property.

Note that the terms in a rent-to-own contract may vary, particularly if you want to buy the property. For rent to own property, you have to pay the down payment, known as "option money," to secure your position as a potential buyer. Generally, the price can be high or low depending on the lease agreement, whereas the range is between 2.5 percent and 7 percent.

If the renters have paid the option money, they get the purchasing rights, but owners cannot force them to make the purchase. The property owners cannot sell the home to other buyers for the agreed period. If the renter decides not to buy the house, the property owner might have to refund the option money per the agreement.

Is Rent To Own Property Beneficial?

Rent to own is a convenient option for people short of a large sum of money to buy a home. It makes the renter entitled to buy the property they rent. The rental contract is based on the terms set in the lease agreement. If your lease term is two years, you have the same period to buy that property.

Don't confuse the lease option with the lease-purchase, which is an obligation to buy the house. As the title suggests, a lease option is an "option" to buy a home you're renting. You may have to face legal consequences if you go against the agreement.

Benefits of Rent to Own for the Buyer

If you’re indecisive about buying a rent-to-own property, learning its benefits for buyers can help you make a prudent decision.

Makes Finding a Perfect Dwelling for You

Are you short on your savings? Do you want time to fix your credit scores or solve your financial problems to buy a home?

If your answer is "yes," renting to own is perhaps the right option. It allows people who don't have much savings for home purchasing to get time to resolve finances. You can save money by paying monthly payments. Plus, you can use this opportunity to inspect the property and area closely to determine whether it's worth buying.

Allows You to Relocate Easily

Does your job require you to relocate more often? Or do you switch jobs frequently?

Lease option properties are an excellent way to rent a place without dealing with taxing paperwork. There are no long homebuying process or mortgage loan requirements as you can directly move into a rent-to-own property.

No Traditional Mortgage Requirement

Your credit score doesn’t have to be in excellent shape when opting for rent to own a home. Getting a mortgage isn't more accessible if you face debt or foreclosure issues. The lease option gives you time to improve your credit ratings. But make sure you pay the rent timely.

No Price Appreciation

As the purchase price in the lease option agreement remains the same for the specific period you and your Owner have agreed on, there will be no price appreciation. Put simply; you don’t have to deal with the increased prices within the contract timeframe.

Gives You Full Control of the Property

When you rent to own a lease option, it gives you complete control of the property. You can repair, renovate and readjust the areas in the property according to your taste. You must consult the Owner before making any improvements to avoid code violations.

 No Taxes to Pay

 As you don’t own the property in reality, when rent to own, you don't pay the property taxes.

Benefits of rent to own for the Owner

Rent to own isn’t only beneficial for buyers only. Homeowners can also benefit from the deal. Some of the benefits include;

·       The tenants tend to stay for a year or two.

·       Can set non-refundable option fees to reduce the risk

·       The income is constant even if the market is uncertain 

·       Buyers build equity in the home that helps owners avoid the real estate commissions

·       Renters will take care of the property on their own

All in all, whether you're a buyer or an Owner, a lease option is a win-win situation for both parties. It is a good investment for first-time homebuyers.