What Is Rent-To-Own?

This is a great question to ask! Many folks have different definitions and the fact is there are several transaction types that folks tend to lump in under a wide category of “Rent-To-Own”. You definitely want to take the time to get fully informed by EXPERIENCED professionals.

One way to quickly determine if you’re dealing with someone who’s not only competent to get your deal done but who also has the experience to back it up is to ask one simple question:

Can you tell me the difference between a Lease-Option, a Lease-Purchase and Seller Financing?

Again, all three of the above transactions tend to get lumped in under “Rent-To-Own”, but they are in fact very different transactions contractually with significant differences that make a huge impact on any deal. If someone says they are all the same…walk away. If someone fumbles through an answer or has to get back to you, proceed with caution or keep looking.

Our Rent-To-Own program is setting you up with a Lease With An Option to Purchase transaction with a NON-distressed Property Owner. These deals are also called Lease-Options. What we mean by NON-distressed Owners is that they are:

• NOT behind in payments, heading towards foreclosure.
• NOT behind on Property Taxes or in Tax Sale.
• NOT upsidedown – meaning they don’t owe more than the home is worth.
• NOT having to sell the property immediately.
• (And we, of course, verify all of the above is true before we start marketing any home for rent-to-own and again right before someone moves in the home)!

A Lease-Option agreement gives you, the Tenant-Buyer, the legal right to move into the home as your residence PLUS you have the Exclusive Option to purchase the property at the end of the contract period (or earlier without penalty). It is NOT a contract that obligates you to buy but gives you the exclusive Option to buy. Lease-Options give you the time you need to get whatever it is you need together so that you can buy the home later. In other words, you can live in and enjoy TODAY the home that you desire to purchase LATER.

All Lease-Option agreements require consideration in the form of a non-refundable Option Fee. This Option Fee is NOT like a security deposit that sits in an account, gains interest and is refundable if/when you move out less any repairs or other balances due.

100% of the Option Fee counts towards the purchase of the home when you go to exercise your Option to purchase later on down the road, so it’s not like it’s an extra fee just to rent-to-own. Depending on the amount, these funds can count as your required down payment for your future mortgage (current minimum down payment requirements for an FHA loan is 3.5% of the purchase price) or it can count towards paying closing costs or both. The Option Fee is also referred to or called an Option down payment.

Our company is NOT a financial lending institution nor do we offer or provide any form of credit or loan, but we certainly can get you connected to such resources if/when you need them.

The Option Price of all of our homes is set at TODAY’s market value. After all, when you go to exercise your Option to buy, your future mortgage lender is going to have the property appraised by a 3rd party.

Unfortunately, there are other so-called rent-to-own “businesses” who will over-inflate the Option price along with promises of high “rent credits” so that they can get the ultimate selling price down to a value that will ultimately appraise.

We don’t play those games. We don’t gamble on speculation. We don’t give the illusion of your “earning equity” with an inflated price that would have never appraised for that amount. In our opinion, it’s not good business to make any transaction more complicated than it needs to be especially with tactics that can easily be considered as misleading.

We prefer to be upfront and disclose everything and have everything in writing with attorney reviewed and approved contracts.

For more information on our Our Rent-To-Own program go to our website at https://www.renttoowninalbuquerque.com