The Potential Advantages and Disadvantages Involved in Rent-To-Own Properties

People who cannot afford to buy a house often choose the rent-to-own option as this option help them to secure a home without making a large down payment. However, before you choose to get into this agreement, it would be a wise decision to have a good knowledge of the subject.

The rent-to-own option

When opting for the lease option, the buyer gets the property at a higher cost than the market rate. Before getting in the agreement, it is important to concur on a potential purchase price and a purchase date. The property can be bought on during the rental period until the expiry of the lease option as the leasing time can range from few months to several years.

If you do buy the house, the rent is credited back to you and it can be paid as the down payment for the house. However if you do not plan to buy the house, the rent would remain with the seller. A point that must be kept in mind is that different states have separate rules therefore make sure to know the leasing rules before making a purchase.

The seller’s benefit

The one of the various reasons behind a seller’s deep interest in making the rent-to-own arrangement is that he is not able to sell his property at a price that he wants. This option provides him an alternative to decrease the value of his home for the time being or rent out his property for a longer period of time. If the real estate market is experiencing a low he can rent his house and when the market is high the property can be sold to the tenant.

The buyer’s benefit

One of the main reasons behind the buyers taking up this option is financial one. If as a buyer you do not have the required money to make the down payment for the property, you can easily choose this option to earn a good credit score before applying for a mortgage from the financing institutes or various lenders. By signing the rent-to-own contract you can easily lock a purchase price and thus you would not have to worry about the fluctuation in the realty market.

Pitfalls for the Buyers

Along with the advantages, the buyers should be aware of the potential disadvantages that can make the process go wrong or can convert his profits into losses. Therefore before entering the agreements, as a buyer you should:

• Check seller’s credits

Look for warning signs that may tell you whether the seller is in financial trouble or not. Check for his outstanding debt amount and look for the reason why he is in a hurry to sell you the house.

• The maintenance option

Read the agreement clearly before signing the agreement and look who is responsible for the maintenance and repair work of the house.

When entering the rent-to-own agreement, it is important that both the parties agree on the legal terms and conditions before signing the deal. Owning a house in this manner can help you to take control of your finances and build up your credits easily.

harji Bajwa Developers has become a trusted name when it comes to investing in real estate. Ranging from apartments to plots as well as villas to duplex homes, we provide multitude of property investment alternatives to enable you choose an option of your choice with ease. Visit our website http://www.harji.org/ to know about our deals.

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