Rent to Own vs Rent to Invest (or Sell) is a popular debate among real estate investors. But which is best? Rent to Own or Rent to Invest? Not always. It depends largely on whether you’ve signed a lease buy or rent to own agreement.
If your lease is a lease to own agreement, you basically have the choice to purchase the house at the end of the rental term. If you can, you’ll want to purchase the house even if you can; otherwise you’ll lose all your rent credit to the landlord and most of your option fee. However, most lease to Own contracts are standard and won’t be overly abused by sellers. That said, some unscrupulous sellers may try to encourage you to sign a lease-to-own contract so that they can get paid more when you go to sell the house in a few years. Be sure to check with your local real estate lawyer if you’re having problems with a lease to own agreement.
Lease to Own contracts tend to be less expensive than renting and you can find more about that on Rentoownreviews. So you’ll initially pay less for your home. You also won’t have to deal with the costly expenses associated with home ownership, such as property taxes, homeowners insurance, maintenance costs, and maintenance. However, there are some significant advantages to lease to own agreements as well. For example, if the market conditions are less than ideal, you’ll be able to keep more of your profits because you don’t have to invest your money in costly expenses associated with home ownership.
When you rent, there are typically no restrictions on who can lease your home. As a result, it can be more profitable to rent than to buy. However, there are still restrictions on who can lease your home and how much you can rent each month. Generally, the lease to own contracts do state that a minimum monthly payment has to be made and that this payment cannot be increased until the sale of the property has been completed.
On the other hand, when you lease, a lease purchase is similar to renting except that you don’t have to pay any upfront fees. During the lease term, the person leasing your property generally pays the first and last month’s rent, the mortgage interest, and a set amount of utility payments. After the term has expired, if you haven’t paid the amount specified in your lease contract, or if the seller has not come to an agreement with you to end the lease, then you are required to leave and may be subject to eviction. In addition, in the rare case where the seller does come to an agreement with you, the lease purchase option fee that you would have paid can be deducted from the final amount you receive from the sale of the house.
Another disadvantage to renting is that many landlords don’t take into account how long it takes people with bad credit to rebuild their credit. If you’ve had financial problems in the past, then you may not qualify for a standard mortgage loan. If you try to get a loan at a high interest rate after this period, the money you need to pay for the rent may simply go to paying off the debts that kept you from qualifying for a regular mortgage. Another drawback to renting is that in the case of emergencies, such as fire or flooding, landlords often can not help their tenants at all. This means that some people with bad credit end up in an apartment by themselves in the event of an emergency.