Posts Tagged ‘property rental’
Rent-to-Own Deals: Smart Questions to Ask
Sellers who can’t unload their properties through a conventional sale are proposing lease purchase (a.k.a. rent-to-own) deals more frequently these days.
For sellers, the advantage of rent-to-own is the likelihood that the renter will eventually permanently take the property off their hands. For buyers, rent-to-own can provide the credit-challenged or cash-strapped a route to homeownership.
But for buyers and sellers, there are also many potential drawbacks. If your customers are considering a rent-to-own deal, here are some smart questions they should consider.
For Sellers:
- Who will tend to the property and pay for routine maintenance?
- Who pays for major repairs?
- What are the costs of setting up and managing an escrow account for the portion of rent allotted to the down payment?
- Will you manage the property yourself, or hire an agent?
- What if the renters change their minds? Who keeps the money in the escrow account?
- If the buyers change their minds, what will be required to put the property back on the market?
For Buyers:
- How much of the rent is going to the down payment?
- How locked in are you if change your mind? What will it cost you to get out of the deal?
- How long will it take to accumulate enough of a down payment that you are likely to qualify for a mortgage?
- What happens if you don’t qualify for a mortgage by the specified deadline? Can you continue to rent?
- Who will be responsible for routine maintenance?
- Who will pay for major repairs?
- Do you hope to strengthen your credit rating by paying rent on time? If so, will the owner report your good habits to credit bureaus?
