Fountain Link

The answer to the question of whether or not rent to own homes are a good deal depends entirely on your individual financial circumstances. Generally speaking, it is safe to say that most property owners are not really interested in selling their property on a rent to own basis – preferring to be paid all at once and having the transaction completed – which means if the owner is selling on a rent to own basis there must be a reason for doing so. In general, there are two reasons that an owner will sell on a rent to own basis: either they are having extreme difficulty selling the property outright or they are running an option scam.

When you buy a home on a rent to own basis, you have to pay the owner outright for you option of first refusal to purchase the property at the time you and the owner have agreed to. This option is a tangible financial instrument and has its own inherent value and due to this it has to be purchased directly from the property owner at the start of the agreement. Since these options can be very expensive, they are sometimes the focus of people running options scams meant to get people to pay for the option and then never be able to act on it, allowing the owner to resell the option once you have failed to act on it.

One of the biggest telltale signs that a rent to own agreement may be an option scam is the amount of time that the contract is for. The primary reason any buyer opts to rent to own homes instead of buying outright is because their credit is too poor to get a mortgage loan for a more traditional purchase. Therefore most legitimate rent to own agreements span a period of time long enough for the buyer to significantly improve their credit, usually between two and five years. However, if the rent to own home agreement is for a very short period of time – like six months or one year – then there is very little chance that the buyer’s credit will be improved enough to purchase the home once the option deadline is reached. In this case, the owner gets to keep the option, the rent, and then can offer the house to someone else.  Protect yourself from being a victim of this by insisting on a contract term that is long enough to allow you to exercise your option.