Brace yourself: this is going to be difficult. As with anything in the real estate industry, you end up thinking you need either a real estate attorney or maybe Superman to wrap his brain around the concept of knowing the difference — between a rent-to-own and a land contract. Not even a kryptonian could honestly figure that one out (which is why you have our rent-to-own consultants helping you out with this one!).
Get interested when a potential seller even mentions this term. It’s an intriguing way for a seller to basically sell the home without giving up the title, basically. You, as the buyer, can purchase the home through contract and essentially pay “rent” (for lack of a better term), and when you’ve paid the entire purchase price for the home, the title to the property’s all yours.
In a way, it’s like leasing a car. You get to drive it. You get to maintain it. You get to go on a road trip clear across the country if you want. But you never get to own it — and that means you can’t sell it or perhaps even upgrade it — until you finish paying it all off. Certain advantages and slight disadvantages there, obviously. You can see why you might want to ask this along with other inquiries about rent-to-own.
The only way I can differentiate on this is that it’s largely dependent on an agreement typically made by the home seller. An offering for a land contract focuses mainly on the entire selling price — whereas a rent-to-own keeps it as a tenant-landlord deal for a specific period of time with an extra portion of each monthly rent going toward a down payment for ownership of the house.
It’s convenient. It’s flexible. And that’s the key. A land contract seals you in for the deal, for the long haul. You can’t back out of it without some form of penalty, because you agreed to basically own the house later on. But a rent-to-own simply offers the option — if you want it (which most of the time you would, provided you negotiate the best of terms for both parties).
Like looking into a mirror or something. But don’t be fooled. A land contract is so different from a rent-to-own that it’s scary. Just be well-informed. Because while you might want to just stick with a full lease on a house and make those payments as if its a mortgage, know that you don’t have a lot of wiggle room….
But a rent-to-own? That’s a whole different story and superhero altogether.
To get help finding a rent-to-own home, click here.
The interesting thing about rent-to-own properties is how private and flexible they really are. There’s no specific basis for them, especially from a real estate broker standpoint. In fact, brokers and agents for the most part wouldn’t care too much about rent-to-owns, because there’s not that much in it for them. Typically, rent-to-owns are all about two parties, and that’s it: the rent-to-own occupant, and the owner. Because of that, there’s a lot of room for negotiation, but do be cautious.
You might even be completely solid on the fact that you will buy the property when the time comes. Even the contract will have an agreed-upon price and down payment after a set number of rent payments have been made. The landlord may know, without a shadow of a doubt, that you’re going to buy the property when the time comes. But you’re still a rent-to-own occupant. A tenant. And that means you don’t have the right to make decisions regarding the property without the owner’s approval.
So when asking the question — out of many questions to ask about rent-to-own — “can I just sell the house to somebody else and pay you the difference?”, know that you’re playing with legal fire in a big way, and you’re going to get burned.
Case in point: you don’t own the house, yet. You, therefore, can’t sell the real estate to anybody else.
One thing to know about your P’s and Q’s, though, is that your contract might allow you to rent out the property. You might even be allowed to hand over the rent-to-own agreement to somebody else, making that other person the rent-to-own occupant. It has to be in writing on the contract, though — or legally the landlord (owner) can simply say “no.”
We can help, as we’re your rent-to-own consultants. You may be a rent-to-own occupant anytime soon, because you’re interested in the prospect. Just know that you have no P’s and Q’s running off; we’re constantly vigilant for you.
Don’t think rent-to-own landlords hold all the cards (and sometimes it seems like they do), because they really don’t. While oftentimes rent-to-own contracts will benefit those rent-to-own landlords, a certain flexibility and sovereignty still resides with the prospective tenant, and the major danger is such tenant just might forget about the fact that as a home renter with many resources available, you have certain rights.
Think about it: you’re still a home renter, even though you’ll be purchasing later on. That means you won’t have to worry about certain repairs to the house. Furthermore, your rent payments will be attributed to your credit report as many case managers for H.O.P.E. to Own will state. This means those rent-to-own landlords — who are often nothing more than other homeowners looking for some extra income out of the home they want to move out of — are responsible for everything from the broken sink to a bad furnace and everything in between. Make note of that.
Additionally, many of the questions rent-to-own tenants will ask involve a lot of legal ramifications. Here’s a big one for you: even if you’re planning on owning, does the rent-to-own landlord still own the property while you’re making your rent payments? The answer is simple: yes. After all, by contract, you abide by the date when the down payment is offered and the lease is signed over to you. Until that day, you’re still renting for that rent-to-own home.
This does also mean that rent-to-own landlord can evict you if you’re not making those rent payments on time. So here’s a little advice for you: be punctual. Don’t slack off. Treat it like a landlord-tenant partnership, and you’ll do just fine.
Sometimes the line gets blurred, though, and that’s where we, the rent-to-own consultants, come in. We’ll guide you to make sure you’re sticking to the role and observing your rights. Rent-to-own contracts can be tricky if you don’t know what you’re doing.
A lot of people don’t know this unless you’ve enrolled with the BBB A-rated H.O.P.E. Program: you can actually add your rent payments to your credit report! Shocking, right? The real estate industry is truly an evolutionary model in ways we all can’t imagine. This changes the game for many, particularly when dealing with a rent-to-own contract. You essentially get the best of both worlds….
Sometimes known as credit restoration, the simple fact that you’re basically itemizing all of your rent payments onto your report will boost your score by leaps and bounds. That’s a good thing given the fact that you’re going to sign a lease contract to buy the home for a down payment, and with a possible 640+ score, you’re sitting pretty good on that pedestal, aren’t you?
Additionally, you could easily go with a firm like Lexington Law while you’re comfortably renting to get any negatives removed, not having to worry about home improvements (because the landlord will then take care of those!), and get your score looking even better than it will when the time comes for you to buy.
You just might find that you’ll qualify even with bad credit. Because in the long run, as long as you’re making those payments, you’re benefiting tremendously through credit repair.
It’s important that you consult with us, your rent-to-own consultants, further about your situation. You never know: that rent-to-own home just might be the right fit for you. But you don’t go into it without the knowledge, understanding and application to negotiate the terms, because remember: ask the right rent-to-own questions, and you’ll get the best outcome. Sure, you’ll pay more out of pocket for rent each month, but that extra money’s going to go into that down payment when you buy, and you just might squeeze even more savings if your credit’s looking sweet.
Yes. Sweet like candy. And we all know that a rent-to-own is exactly like that: candy. GET YOUR CANDY RIGHT HERE.
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People talk a lot about rent-to-own homes like it’s the new innovation in the candy business. After all, when the Snickers bar first came out, everyone was in a rush about the novelty and ingenuity of merging chocolate and nuts together, so the rage made waves, for sure! Rent-to-own is like that — it’s candy. It’s yummy. But if you’re not careful or haphazard about rushing into an agreement without asking the correct questions, you could get yourself into a lot of hot water (or wrappers all over your floor, plus a few toothaches).
The thing is not every seller/owner out there will say flat-out what the deal is. To them, they’re thinking they just need a tenant. But what about rent-to-own? I can imagine many sellers/owners would blink at the idea, so it is important to ask about it and know what you’re getting into.
There’s a lot of negotiation that comes into play with a rent-to-own, so it’s no surprise that questions get asked on a regular basis. The thing to remember is this: what are the right questions to ask? Clearly you have an advantage with all the rent-to-own reviews available in the market right now.
It’s imperative that you know that not everyone is in the know — especially sellers/owners. Most don’t know what the heck is going on, especially when they’re dabbling in the prospect of a rent-to-own. Our rent-to-own consultants can educate them. We can educate you. And we can make sure that rent-to-own works out well for both.