Rent- to- own is a phrase that has taken many industries by storm, from furniture to real estate and so on. So what rent to own mean in the real estate sector? Also, what should you know before signing the contract? Here’s a simple guide.
What is the meaning of rent-to-own?
It allows you to rent a property and at the end of the lease period buy the house at a pre-set amount. Ideal candidates for such an arrangement are potential home buyers who cannot afford to buy the house under the prevailing circumstances. Since they like the home and would want to own it, they can agree to rent it for a while as they work on their finances and then buy it later.
As a renter, you should exercise caution during the process. There are several stipulations within a contract, so understand all the lease options.
Steps to take before signing the contract
1. Establish a reasonable sale price
The pact will stipulate that you are the only individual who is allowed to purchase the property during the term. Although you are allowed to buy the house at any time during the period of your agreement, the sales value is decided upon already. That is why you should make certain that the sales cost is reasonable enough and that you do not end up paying more than it is worth.
2. Complete a home inspection and document all repairs
The conditions of the home should reflect in the sales price, just like in all other purchases.
3. Analyze the exit section
Ensure that the contract denotes exactly what will happen if you fail to buy the home at the end of the rental period.
4. Make sure all expenses on property are paid
The insurance charges and property levy should have been cleared by the time you sign the agreement.