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Menifee Real Estate Questions—Should You Opt for Rent-to-Own Property?
October 9, 2018 | Bill and Linda Robinson
With housing becoming less and less affordable every year, first time homebuyers are constantly seeking out alternative paths to home ownership. One of the burgeoning ways to do so is the ‘rent-to-own’ scheme. So how exactly does the scheme work? Your
Menifee, CA real estate professional share the following information with you so you may know if rent-to-own is a home ownership avenue you might consider taking.
What is rent-to-own?
A rent-to-own scheme is basically a leasing arrangement wherein a prospective buyer pays monthly rent to the owner with a percentage of the payment allocated for a home purchase later. The arrangement usually lasts two to
five years, after which the renter can decide to continue with the purchase of the property based on the price agreed upon by both parties early in the transaction.
Why should you buy into it?
Many homebuyers are opting into a rent-to-own agreement because it does away with the need to save for a deposit, which is increasingly becoming out of reach for many potential buyers because of the constantly rising
real estate prices. Since a down payment is not needed to move into the house, renters gain the opportunity to save for a down payment and boost their credit record in case it needs improving.
Renters are also able to “test” the neighborhood for a lengthy period, which can give them a better idea if they indeed want to move there. What’s more, since the sales price and terms are settled early, the renter gets the chance to purchase the
property at below-market price in the future.