REAL ESTATE TALK with Julie Brandle: Is rent-to-own housing a good idea?

Julie Brandle
For the Lakeside Leader

Realtors get the question all the time “Will that seller do a rent to own?” That of course, will depend on the Seller’s situation and whether they need to sell the home and use the proceeds to purchase another property or not. If you and your landlord decide to jump into a Rental Purchase, please seek legal advice or help from a Realtor as you will need to protect yourself from any surprises down the road.
There are many variations of rent to own agreements but the premise is that the seller allows the tenant to purchase the property at some point in the future – usually 1-3 years- for a price that is agreed upon in todays market. Generally, the tenant will pay a slightly monthly higher rent payment and a portion of the rent will go towards the down payment at the end of the agreed upon term. This can be a win-win for both parties, however, I have seen a lot of rent to own contracts started in the last decade and very few of them actually turn out as agreed upon – if at all.
The downside: What happens to the extra rent you have paid your landlord if you decide not to proceed with the purchase? What about any maintenance or “sweat equity” projects started during the tenancy? Typically, you won’t see any of that money back. Usually, the tenants that engage in these contracts think that their credit will be “fixed” by the end of the term, but what if it isn’t and you still cannot obtain traditional financing? You are still just a tenant at the end of the day! There are many pitfalls to rent to owns and I caution both landlords and tenants to read the fine print before signing on the dotted line!
If you are interested in a rent to own agreement, it would make sense to talk to your bank or mortgage broker about financing before you sign anything. Ultimately, rent to owns are not the healthiest path to owning your own home.
For real estate advice, call Royal LePage Progressive Realty at 780- 805-3111 visit our webpage at or drop by the MRC and use our Real Estate kiosk!


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