Rent to own is very simple to understand. As the name says, rent to own means that you can rent a house for a specific time period and later purchase the same by making some down payments to the original owner of the house. It is same as the lease option.
There are a specific percentage of the people who reside on rent. They keep paying huge amount of rents from their earnings weekly or monthly to stick to that place. These people either do not have sufficient savings to buy a new house for themselves or their earnings are not enough to allow them save something for future. Many people have no idea about what they can do if they can purchase a house from the landlord after spending a particular time period at his place.
In the lease option or rent to own option, a person can sign a deed with the owner of the house for a specific period of time for paying a particular amount of rent to him and then buy the same from him later. The seller and the prospective buyer should be very much clear about the terms and conditions before entering into the agreement. Both the parties should agree on the sale price and the amount of rent the renter will have to pay to the owner of the property.
Renting to own has both advantages as well as the disadvantages. Once the decision is taken and both the parties agree to the decided amount then they enter into a written contract which cannot be changed later. The price of the house in case hikes or falls during the contract period the agreed amount will not change. In this, the renter has to pay a specific amount to the owner first know as the option fee which later gets added to the amount he will pay as a down payment of the property. The rent is also a bit higher than the usual rent because a part of it is saved by the owner as a premium which again gets added to the down payment of the house.
The renter in case decides not to buy or say fails to provide sufficient funds at the maturity of the contract then the entire contract will collapse. The initial payments made by the renter to the owner that is the option fee will be kept by the owner and the rest will be returned. Rent to own is very good option for the people who most of the time feel helpless to purchase a property of their own due to lack of sufficient down payment.
Like the advantages, there are many disadvantages also in the leasing option. The renter can also be scammed sometimes but this happens if he has not investigated about the house properly before entering into a contract with the owner.
Looking at both the sides, rent to own makes out to be an easier way to own a house of one’s own as it works like a car lease were chances of risk are less and the mode of buying is more affordable.