Rent to Own Options


Many times over the years I encounter a Rent to own home with my buyers that are not ready to purchase, but really want to do so.


The idea is that a portion of your monthly rent is applied to the purchase of the house, on a set date.  Typically many fees and additional expenses are also present.


Many times of the rent to own homes I have encountered have these things to consider:

  • A higher than average monthly rental rate (because typically the portion that is higher is being applied to your "option" to purchase, when the agreed upon future closing date arrives the portions of payment are credited back to you at closing.
  • A larger than normal deposit that you will loose if you do not purchase the home
  • Often you will have to agree to a future sale price, which is forecasted upfront and agreed upon by all parties and typically much higher than the current market price
  • Non-refundable fees -especially if you decide to not purchase the home
  • Financing isn't guaranteed as you'll still have to qualify for a mortgage
  • Instead of the landlord fixing the repairs, now all repairs now fall on the rent to own, renter


The bottom line is most of the time, it makes much, much more sense to save up for a down payment and while you are saving, to repair any credit issues you may have.  Typically, the rent to own buyer is paying too much for XYZ house, as the market rate for the future sale, is calculated 3 and 5 years prior, and agreed upon upfront. 


Often and more than not, these upfront calculations are not accurate 3 and 5 years later, when the option to purchase the home comes due.


Therefore, typically the rent to own buyer decides not to purchase, as the market they agree to 3 or 5 years prior, does not match the actual market rates in reality.


By not purchasing the rent to own home, the loss of the initial down payment is lost to the seller, which in many cases is substantial.  



What's the difference between a client and a customer?

In real estate terms, and specifically as a Realtor I can have conversations with customers and say whatever I want really, but as a client, I am required to advise you directly and guide you on every scenario on what will or will not be a benefit for you throughout the entire transaction, even if never buy anything too.   

So just because you have spoken with a real estate agent, that agent may be in contract and working for another party and can say or do things to benefit their client, as long as it's ethical to do so.  However, I've seen a lot in my career, which spans since 2004.  I am sure you can imagine.


Let me try to explain in this graphic:

REALTOR®, RENE

6.  Once you and I have spoken, I will put a custom search together in our MLS system.  These homes that I will be sending you are not scams, typically..., but online and everywhere else you look, you will encounter them on the regular, so please be on the look out for anything that sounds too good to be true. 


7.  Once we are close to your target date, we can start looking as soon as you are ready to move.  We can look in the day or night, weekdays or weekends.  The sooner, the better is typically the case.  Keep in mind, you'll still need to apply and additionally there may already be other applicants in front of you.


8.  Any restrictions you may have like pets or work vehicles need to be addressed upfront and including any credit issues too.  A personal letter to the seller explaining your situation or pictures of your large scary pit bull kissing a baby always help out.  Sometimes offering an additional deposit can make the difference between getting the house and not getting the house.  Communication is a critical factor for most landlords.  

Additionally, a letter to the landlord in general is a great idea.

Dan Wood

Renter Questions


As a lifelong Realtor, I can tell you that a lot of times I have helped many client's, friends and family get into a rental home, condo, townhome, duplex and so on.  For more tips and insight, please read the homepage.

Here are a few tips to consider when looking for a rental home:

1.  Be ready to move quickly  Many rental homes that are currently on the market are working applications that have already been submitted. They will typically NOT, "hold" the house or space for you for any length of time worthy of mention.  So, if you submit an application on Monday, be ready to move that Friday.  Once you submit an application and deposit the application fees, any delays are typically due to incomplete information and or delays from awaiting returned requests from the application. Sometimes it can take a day, but usually it takes a few Monday through Friday wait days, to find out if your application has been approved.  Rent vs. Buy Calculator Link

Monies required typically are:
Security deposit (which is not the last months rent, but typically equal to one months rent)
Pro-rated amounts (for gaps in the initial first month)
Pet Deposit for each pet (typically not reimbursable) 
First months rent upfront
Last months rent upfront (sometimes, but not always)

Moving Expenses
Power, Water, Gas, Internet
​Renter Insurance
Moving Trucks
Movers
Boxes and Packing Materials (lots of nearby liquor stores freely give away nice size heavy duty boxes, a perfect size for moving)

Typically, landlords are looking for these things:
No Criminal History​
​Good Previous Rental History

Current Income

Good Credit History
No Prior Evictions less than 10 years old
No Bankruptcies
Pets under 20lbs (have shot records available)
The income to rent ratio should not exceed 2:1



2.  Inspect it yourself or pre inspect it as we are looking, and or even pay for a general inspection too.  Depending on the house and your needs, it's a great idea to know before hand what you are getting into.  Take a look in the crawl space and up in the attic to make sure you are okay with everything.  Keep in mind, you will need to fill out a form that allows you to put what the home was like when you moved in, so you don't get charged for the same items, when you move out.

Once you are approved, the process moves VERY quickly with lease signing, monies and keys being exchanged.


3.  Most of the time the landlord or the property manager will want an “good” credit score.  If you have a poor credit score, it's best to tell me upfront so I can help you sift through the ones that will not work out for you.  Additionally, you'll save $$$ all those wasted application fees...


To increase your chances of being approved for a rental home, it's important to maintain a good credit history. You can check your credit score for free through various online services. If your credit score is not as high as you would like, you can take steps to improve it by paying bills on time, reducing debts, and correcting any errors on your credit report. Remember, having a good credit score can make a significant difference in your rental application process.


4.  Scam City Galore Alert! Wow, there are a lot of scams out there, but I see them more and more and more with the rental market. Particularly, with the rental deposits. Customers have told me that they’ve submitted an application and paid the application fee, only to never hear back. Typically, everyone over the age of 18 is considered an applicant. The fees usually range between $50-65. Sometimes I’ve seen them as low as $35, also. 

Watch this on youtube
​or this...

or this too.


5. Just as if you were purchasing a home, I am still required to have you sign a buyers representation agreement, even though you are only renting the home. This agreement spells out that we are working together and that I will earn for my broker, at minimum a % of one month's rent, as commission for my work with you and for representing you throughout the transaction and represent you.   If you do not rent anything, I will not get paid anything.  If you do, in reality, I Dan Wood, your realtor, will earn this by being paid by my broker, whom is typically paid by the listing broker, who is typically paid by the seller. However, if in the event, the owner or other broker does not pay my broker a total %, that you would be responsible for remainder, up to that % total.   Most of the time, this does not happen, as the listing broker pays my broker the full % of one months rent.  These commissions offered are no longer displayed in the listing after August 2024.  ​ 


Various % and $ Amount Commissions will still be offered in some cases, and in other cases no commissions may be offered, but they will not be posted on the listing service or posted online to the public in any way.


Let me explain in this graphic: