Tenants and Buyers: Features and Benefits of Rent to Own Leasing

 How do you feel about being a renter who has the option to purchase while leasing? Do you think that you have an upper hand in that situation just as the property owner? You might be surprised to find out the facts on this topic!

Some people think that  rent to own only benefits the property owner, or that they stand to enjoy even more benefits than the tenant who is the prospective buyer. This simply is not true. Turns out there are tons of benefits that buyers can look forward to. Keep reading to see all the good news!

 According to scholarly work producted by the authors at Lease2Purchase.com, “If you are in the market to buy a home, you are probably aware of the advantages home ownership provides (tax shelter, appreciation, security, etc). If you are actively seeking homes for sale on a Lease 2 Purchase agreement, you are either (1) a very smart renter, (2) a very smart real estate investor, (3) not ready to make a commitment, (4) cannot yet purchase a home through conventional means or (5) any combination of the aforementioned. The Lease 2 Purchase contract provides you with many features and benefits, but perhaps the most powerful one is the rate at which you accumulate equity. Compare any lender’s loan amortization schedule to that of a Lease 2 Purchase contract and you’ll quickly see that the Lease 2 Purchase contract wins hands-down — every time. Moreover, the buying power of a Lease 2 Purchase contract can quickly and easily land you a home that you could only dream of buying the conventional way.”

Of course, it is the responsibility of the buyer to obtain any and all legal information from the proper sources when going forward with such a big decision to rent or purchase a home.

In a nutshell, there seems to be a much larger list of benefits to offer compared to the shorter list on a different article we posted regarding landlords and property owners on this same subject.

  • No lengthy escrows or mortgage approvals

  • Control of the home

  • No taxes, less liability

  • Quick move in time

  • Maximum leverage

  • Profits from appreciation

  • Possible sale for a profit

  • Increased buying power

  • Credit problems okay

  • Maximum leverage

  • Time and Minimal maintenance

  • Privacy and Peace of mind

     Furthermore, and to elaborate on some of the most important bullet points… There is faster growth in equity because it accumulates much faster (five times or more!) than with conventional financing through a bank or lender. Every month a portion of your rental payment (typically $100-$500) is credited towards your down payment or off of the sales price.Instead of having rental payments doing nothing for you, the rent money can be helping you move towards an actual purchase each month. “When you sign a Lease 2 Purchase contract, you will pay the seller an option deposit. This money is your vested interest in the home and will be fully (100%) credited to you when you buy the home. So, in summary, the purchase lies in the fact that option money is credited towards it.” When you purchase a home the conventional way, you must pay at least 5% down plus closing costs and prepaid fees. When you buy with a Lease 2 Purchase, you only pay first month’s rent and a small option deposit. This will save you between 25% and 85% every time you buy a home. So essentially, you are having to provide the very minimum cash out of pocket and upfront.

Since you have given the seller an option deposit and you have been receiving monthly rent credits, there will frequently be very little or nothing left to pay for a down payment at closing. In fact, there are frequently situations wherein the buyer can experience having to place  no down payment at closing.