5 Scenarios To Avoid When Considering A Rent To Own Home
One of the best ways to own a home in Edmonton is to consider a rent to own contract. This allows renting a home with an option to purchase the home at the end of the lease.
However, you have to be mindful of the deal before putting pen to paper. Here are 7 scenarios to avoid before you consider a rent to own home.
Paying more monthly rent compared to renting
A rent to own deals involves the landlord crediting a portion of your rent payment towards the purchase cost of the house.
However, some might not do this out of the goodness in their hearts. There is a likelihood of expecting something in return.
So might find yourself paying more monthly rent than if you just opted for a rental contract. Keep in mind that not all the additional amounts might be contributing to the purchase cost.
Look for a rent to own deal where you are sure that the whole extra amount on the rent payment is credited to the home purchase.
This is being sure that the landlord is playing their part in saving for you towards purchasing the home.
With this, you are sure that by the time the lease expires, you have a significant amount to add on your down payment to make the home more affordable.
Bad property valuation
Home values keep fluctuating however; it can increase when the property appreciates.
So, expect property prices to rise or fall unexpectedly. You have to study the real estate market before you can find rent to own homes in Edmonton.
This is important because the contract reflects the current value of the property according to prevailing trends.
You are going to lock in that property price for the duration of the lease.
Some rent to own deals allows setting a purchase price rent before you negotiate and lock in that price before you purchase the home.
There is a likelihood of the property losing or gaining value by the time you purchase the home.
However, you are to pay the agreed price at the time of signing the contract.
The ideal rent to own deal is one where you can purchase the property after covering any difference in the agreed purchase price.
Responsibility for repairs to the house
Landlords expect to make a profit from a rent to own deal. However, be wary of some landlords looking forward to avoiding repair costs for the homes they are planning to sell soon.
Rent to own deals might include conditions that require the tenant to cover all repair and maintenance costs for the property.
So, you have to understand your responsibilities before putting pen to paper. Keep in mind that rent to own deals varies by state.
Don’t rush to sign a rent to own contract for its immense benefits.
Be sure to understand whether you can cover the repair costs of the home you are planning to own in the future.
However, ensure that the repair and maintenance costs are manageable to avoid hiking your monthly costs of the property.
Keep in mind that in case you change your mind about purchasing the property, you forfeit the money spent to repairs and improvements.
Scams and shady landlords
You have to understand some of the risks involved when you opt for a rent to own deal.
Keep in mind that you are going to pay extra each month for rent.
The landlord is expected to credit the additional money toward the total purchase cost of the property.
There is also an obligation to cover repairs and maintenance costs on the property with the hope of owning it someday.
The landlord takes little risk since he remains the owner of the property throughout the lease.
On default, you lose the home and contribution made on the purchase cost.
Some of the issues to look out for before signing this deal include:
- Landlords lacking legal right to sell the property
- Property headed for or in foreclosure
- Property in disrepair or with hidden issues like asbestos or lead
- Inheriting several years of unpaid property taxes
- Landlord failing to make appropriate fixes after signing the contract
Possibility of loss after late or missed payments
Standard rental agreements come with a high late fee when you are a repeat offender or facing possible eviction.
However, late payment for the first time won’t damage your reputation with the landlord.
The landlord can even waive the late fee.
Some rent to own landlords can also be understanding enough to waive the late fee but the late payment might void the rent to own deal.
Other scenarios can void the rent to own contract include violating no pets policy and failing to make appropriate repairs on time.
You have to weigh your options to ensure that this is the best move to own a home.
Conclusion
When interested in owning a home through a rent to own deal, be vigilant before putting pen to paper.
Ensure to review all terms in the contract to ensure that the deal will work for you.
Category: Housing
