Prospective homebuyers are increasingly exploring alternative paths to homeownership. One such avenue is the rent-to-own model. This path offers a middle ground between renting and traditional home purchasing, providing individuals with an opportunity to ease into homeownership through a rent-to-own provider.
What is Rent-to-Own Housing?
Rent-to-own housing, also known as lease-option or lease-to-own, is an agreement in which a tenant rents a property for a certain period of time, with the option to purchase the property at the end of the lease. This type of arrangement can provide benefits for both the tenant and the landlord, as it allows the tenant the opportunity to purchase a home without the immediate financial commitment of a traditional mortgage, while also allowing the landlord to sell the property at a predetermined price.
5 Reasons to Use a Rent-to-Own Provider
There are several reasons why someone might choose to purchase a home through a rent-to-own provider.
1. Build Credit & Save for a Down Payment
Rent-to-own housing can be a great way for tenants to build credit and save for a down payment. A portion of the rent paid each month is often credited towards the purchase price of the property, which can be used as a down payment when the tenant is ready to purchase the property.
Rent-to-own housing can provide more flexibility than traditional home buying. Tenants can test out a neighbourhood or home before committing to a purchase, and they can move out at the end of the lease if they decide they don’t want to purchase the property.
3. Stable Housing
Rent-to-own housing can provide a sense of stability, as the tenant has the option to purchase the property at the end of the lease, rather than having to move again.
4. Non-Traditional Credit History
For tenants who have a non-traditional credit history, renting-to-own may be a more viable option than a traditional mortgage. Rent-to-own providers may be more lenient when it comes to credit requirements, making it more accessible to those who may not qualify for a traditional mortgage.
5. Improve the Property
Tenants may have an opportunity to improve the property while they’re renting it. This can increase the value of the home and make it more appealing to the tenant buyer in the future.
Why Would Someone Purchase a Home Through a Rent-to-Own Provider?
Maria is a tenant who is interested in purchasing a home, but currently does not have the financial means to do so. She has a non-traditional credit history and may not qualify for a traditional mortgage. After being approved for JAAG’s Rent to Home Solution, Maria works with a real estate agent to find a home of her choice, considering her purchase price budget. Then JAAG Properties buys the property and Maria enters a rent to own agreement, moving in immediately and pays rent to JAAG. After 3 years, Maria will then buy the home from the rent to own company and become a homeowner.
In this example, Maria has the opportunity to build credit and save for a down payment while renting the property. Maria also has the flexibility to move out at the end of the lease if she decides she doesn’t want to purchase the property and finds a more suitable one.
Choose JAAG Properties as Your Rent-to-Own Provider
Rent-to-own housing can be an appealing option for those looking to purchase a home but may not have the immediate financial means to do so. It can also be a great way for landlords to increase the potential selling price of their property. As with any real estate transaction, it is important for both parties to completely understand the terms and conditions of the agreement, and to have legal representation.