Rent to own is a program where someone rents a condo, but has the option to purchase it ultimately. The buyer and seller agree upon a purchase price and a length of lease ranging from a few months to sometimes a few years. A buyer may be interested in rent to own if they can't qualify for a traditional bank mortgage, either due to imperfect credit or not having enough cash for a down payment. Rent to buy allows the prospective buyer to build up a down payment for the property, since part of their rent will be credited back to them at the end of the lease period.

Rent to own program is not only a great way to build up a down payment, but also a valuable opportunity to repair bad credit. At the end of the lease period, which typically lasts up to 24 months, the buyer can attempt to acquire a bank mortgage with their improved credit score.

This is a more flexible arrangement than traditional means, since everything is negotiated between buyer and seller. The condo seller usually seeks to sell the property as quickly as possible (i.e. offering the shortest lease period possible), but the lease can be lengthened according to the buyer's needs. Sellers of rent to own properties understand the situations of their prospective buyers, so they are usually willing to work toward a balance. The monthly rent, as well as the eventual purchase price, have no strict guidelines and can be set to whatever best suits both parties.

Condos with a rent to own option can be found all over the place, from suburbs to city centers. Contact us to so we can help you buy a condo!

Although you won't need a large down payment for your condo like you would with a bank mortgage, you will still need about 5%-20% (depending on seller requirements) of the purchase price for down payment to the seller (also known as an option fee). This fee can be applied toward purchasing the condo at the end of the lease period (usually it is partially applied). In addition, you will usually have to provide a security deposit (as in a traditional rental situation).

The seller will run a rental history check (maybe a credit check if needed) on you during the application process. They have the right to accept or deny you based on your credit, but they do not expect you to have perfect credit, so no worries there. Rent to own program is commonly used by people who have problems in their credit history and need to improve their credit score, so many sellers will display some level of understanding regarding this. Even if you have faced financial problems such as late payments to credit cards, large medical bills, bankruptcy, foreclosure, or if you just don't have much of a credit history, rent to own could be the right path for you to own your own condo.

If you do not have any issues with your credit history, but you are having difficulty gathering funds for a down payment, you may still want to pursue a rent to own program plan. Having a good credit score will benefit you in this situation by shortening your lease period, allowing you to buy a home you want sooner.

During your lease period, you will be paying a rental rate that is usually above the market rate. This extra amount is the money that gets credited back to you at the end and can be used as down payment later on. This amount is also called rental credit . If you rent a condo whose market price is $800 a month, for example, you may end up paying $1000 per month instead. This extra $200 per month, also known as a rent credit, is what gets accumulated and credited back to you for your eventual down payment. You do not need to worry about paying taxes or association fees on your condo during the lease period, since that will remain the seller's responsibility until you officially purchase it. Rental credit amount can be negotiated and depending on the seller you can save much more than just $200 per month!

What happens if I don't buy a condo?

If you decide not to purchase the condo by the end of the leasing period, you may simply walk away. You are under no obligation to purchase the property. However, you will lose the rent credit you have built up, as well as the option fee you provided at the beginning of the contract.

Someone might decide not to purchase the property for many reasons, such as market prices for similar housing dropping drastically during the lease period, or an inability to procure financing at the end of the term. However, it is typically in the prospective buyer's best interest to follow through with the purchase once they have committed to a rent to own agreement. People considering rent to own should be very serious about wanting to buy a condo, since they stand to lose a lot of money if they back out later.

If you have any questions, please feel free to Send Us An Email! or call 612-840-6507

If you are ready to buy a condo, Register Today !