3 Reasons To Avoid Rent-To-Own Homes

Some potential home buyers see rent-to-own as an excellent option for buying a home. But the truth is that things like higher costs and riskier lease terms are some red flags to consider when weighing your options. 

If you're wondering if rent-to-own homes are a good option, here are 3 considerations before you dive in.

1. You’ll end up paying more…

These agreements usually feature higher monthly payments than a standard rental agreement. 

If the standard rent for the home is $1,600 a month the rent-to-own agreement may be $2,000 a month or more.

2. You Could Lose Out on Savings

These agreements usually include a nonrefundable fee which can be between 2.5%-7% of the home's value. 

A $350,000 rent-to-own home could cost you $8,750 to $24,500 in addition to the higher rent to enter into the agreement.

3. Don’t expect to call the landlord about a leak…

Your landlord isn't going to be keen on spending thousands of dollars on maintenance and repairs over the next few years if the sales price of the home is set and they’re trying to make a profit. Most agreements will contain wording that requires you to pay for all repairs and maintenance on the home for the duration of the contract.

Conclusion

Rent-to-own homes come with risks you should be fully aware of before proceeding. You need to be careful about the contract and make sure that you understand all of the implications before signing on the dotted line.

If you want to learn even more details and considerations about rent-to-own homes including how the agreements work, how your mortgage could be affected, and more - check out my full blog post, “What Are The Disadvantages of Rent-To-Own Homes?” on my website.

   By Ashley Melton, Realtor®