Larger home inventories coupled with tougher financing requirements have made it difficult for both sellers and buyers to achieve their respective goals. In the search for creative solutions, one has recently begun catching on — rent to own.
The advantage for buyers is that a portion of your rent payment is put into an escrow account to be used eventually for down payment on a traditional loan. You can begin building equity before you’ve even applied for financing.
If your credit is less than perfect or you simply haven’t the funds available for a significant down payment, this could be a great opportunity.
Sellers also benefit from receiving income from the tenants and the likelihood that they will eventually purchase the home outright.
However, caution must be exercised, and you can protect yourself by seeking the advice and services of a qualified professional Realtor. Many Realtors can even manage the property for you.
Consider who will maintain the property and what percentage of the rent will go towards the down payment. What will happen if one party wants to back out of the deal or if the renters don’t eventually qualify for financing?
These are just a handful of the questions and concerns associated with this otherwise mutually beneficial arrangement.
If you’re facing challenges as a buyer or seller, consult with a Realtor today to discuss the possibilities.
The Placer County Association of Realtors is the professional trade association representing approximately 3,300 Realtors, affiliates, and other related industry representatives in Placer County. Call them at (916) 624-8271 or visit their Web site at www.pcaor.com.