Rent to own.... is it for me?

Rent to own.... is it for me?  

I was recently at a social function and was asked about the concept of rent to own.... so I thought I would share my thoughts here.

We have seen a huge increase in the rental market over the last few years. Many factors have lead to this. They include lenders tightening their requirements for loans, unemployment at a high, homeowners facing foreclosures, short sales and bankruptcy. All of these factors have unfortunately forced people to look for alternatives to home ownership.

These factors coupled with our local real estate markets flooded with inventory leads to a great rental market. The question to ask your self is do you want to become a landlord?

For many this is an endeavor they are not prepared for. You no longer live in the house but still have to take care of it. You are still responsible to be sure that roof is in good condition, the leaves are cleaned up, the snow is plowed, the furnace is heating, the refrigerator is cooling.... and the list goes on. But on the flip side could that rent cover the mortgage and allow you to move forward with your life plans that brought you to the real estate market in the first place.

The answer is.... maybe! Some tenants will treat your property like it is their own. Others.... not so much. If your intention is to ultimately sell, finding a tenant who wants to rent with an option to buy is a great alternative. You will not see the immediate proceeds but you will be closer to a sale and most of the time will find a good tenant. Most people who choose the rent with the goal of owning treat the property better – knowing that they will one day own it makes them a much more committed tenant to maintain the property.

Things to consider with a rent to own situation:

• Negotiate the sale price before the tenancy begins.
• Agree on a rental term and time frame for the purchase to occur.
• Decide if any of the rent will be applied to the purchase.
• With all tenants run a credit check.
• Ask for references.
• Work with a Realtor to determine the market appropiate price for your rent.
• Decide if you will use a property manager or be the point person for your tenant.

Renting is not the solution for everyone.

Before you decide to offer your property for rent be sure to work with a professional to determine you are properly marketing your property. Is it priced right for the market place it is in. Make every effort to sell.... but in the end if renting is an option for you – rent to own may be a great way to both sell your property and find a great tenant to take care of your home as if it were their own.... who knows it may be one day!

Feel free to contact me for more information on this topic or any of my blog topics. I have posted today on our Facebook page the Tolland County sales report for June 2010 – June 2011. See how your market fared.