Rent to Own Statistics

September 5, 2017 by Marty Orefice | Rent to Own

Find out the true facts and statistics about rent to own.

Rent to Own Facts

Rent to own is a combination of renting and buying. The buyer pays an option fee to the seller. The option fee gives the person renting the unit the option to purchase the property.

Then, the buyer rents the home for a lease period and purchases it when he or she is ready. Before the lease period begins, the seller and buyer can work out rent credits which are applied toward the purchase price of the home should the buyer proceed with purchasing.

Should the buyer decide not to purchase, the home the seller keeps all rent credits accrued and the option fee.

Separating Rent to Own Facts from Fiction


You have to pay a cash option fee. While paying the option fee in cash is the most common option, you can rent to own with no money down. You simply need to offer something else of value in the place of cash, like a good or service.


You have to pay an option fee. The option fee is what gives you the option to purchase the home. If you do not pay the option fee, you’re basically just renting the house.


You have to wait until the end of the lease to decide whether you will purchase the house you are renting.


Your rent to own contract gives you the option to purchase the home at the end anytime throughout the lease to own term. If you qualify for a mortgage and you’ve saved up enough money to make a downpayment, you can close on your rent to own home.

Fiction (SOMETIMES):

If you sign a rent to own agreement, you need to purchase the home, regardless of whether you change your mind.


There are two versions of rent to own: (1) Lease-Option and (2) Lease-Purchase. If you have a lease-option agreement, you do not need to purchase the home at the end of the lease, if you decide not to. However, if you have a lease-purchase agreement, you are contractually obligated to purchase the home at the end of the lease.


Rent to own rent prices are always higher than fair market rent because of rent premiums.


Rent to own rent prices are not higher than fair market rent. The rent is typically fair market rent and you and the seller can negotiate whether you should make rent credits a part of the deal. Rent credits come in three forms, one of which even involves you paying nothing extra.

1. The seller agrees to credit a portion of your rent toward your down payment.
2. You and the seller agree that you will contribute $100 of your own money and the seller will match that amount with his or her own money, which is coming from your rent payment anyway.
3. You pay extra money each month, which the seller keeps until you move out. The seller contributes nothing extra.

If you buy the home, you get all the money back and you lose nothing. You paid the same amount that you otherwise would to rent a property and the extra that you paid comes right back to you.

It’s only in the case that you do not purchase the property that rent to own becomes more expensive than regular rent.

Rent to Own Statistics

According to the Federal Trade Commission survey on rent to own consumers, 2.3 percent of households have participated in rent to own transactions. Of that 2.3 percent, 4.9 percent participated them in the last 10 years.

The survey, conducted in the year 2000 represents the entire rent to own industry. That includes people who rent to own furniture, electronics and other purchases. It is not limited to the rent to own home industry.

Almost 80 percent of people who rent to own are between the ages of 18 and 44, according to the same survey.

Sixty-seven percent of people who rent to own intend to purchase the product at the end of the lease and fifty-eight percent of people who rent to own actually purchase.

While the majority of people who rent to own eventually purchase the products they are renting, there is still a large chunk of people who rent to own that do not purchase the home.

That is the reason why the option fee is so important for renting to own homes. The seller is committing not to sell the property to anyone while you are leasing it because he or she has the expectation that you will purchase the home at the end of the lease and he or she will receive the full value of the home in cash. If you end up not purchasing the home the seller does not get the money. The seller’s time has been wasted.

The option fee serves as an incentive for a buyer to go through with purchasing the home and a consolation for a seller who ended up not selling his or her home.

Factors Influencing Consumer Opinions About Rent to Own

Twenty-seven percent of all rent to own customers complained about high prices for rent to own products. That complaint makes a lot of sense. Renting to own is considerably more expensive than buying outright. It can cost more than plain renting too.

If you rent to own a home at $1,000 a month for 2 years and then purchase a home for $100,000. You have essentially paid $124,000 for the home – 24 percent more than people who buy outright.

People do it because they cannot afford the down payment on a $100,000 home when they start the lease. Or, they do not qualify for a mortgage quite yet.

For someone who cannot yet purchase a home, the extra $24,000 would have been spent on rent regardless. Therefore, the added expense of rent to own is nonexistent because if the person was able to purchase a home at the time, they would have.

The tricky part is when rent premiums and option fees come into play.

An option fee can be anywhere between one and five percent of the total cost of the home. Therefore, on the theoretical $100,000 home, the option fee would be between $1,000 and $5,000.

The option fee makes renting the home more expensive, but it does not make the purchase price more expensive. You see, if you purchase the home, you will still be paying $124,000. The only difference is that you will have a $1,000-$5,000 credit applied to your down payment.

However, if you end up not purchasing the home, you do not get the credit, so instead of $24,000 for 24 months of rent, you paid $29,000 for 24 months of rent. That’s almost 21 percent more than fair market rent.

Then you factor in rent premiums which may be in your contract. For example, you may have paid $1,100 a month, in exchange for a $200 credit each month toward your down payment. In this situation, you would have a $4,800 credit toward the down payment of your home in addition to the option fee.

However, like the option fee, if you choose not to purchase the home, your rent would be $2,400 more expensive than fair market rent. Rent premiums are a good deal for people who purchase the home, but the added expense can make some customers disgruntled.

What Do These Facts, Figures and Statistics Mean

In general, renting to own is not the best option. When you have enough cash and a good credit score, you should not rent to own. However, many people do not fall into this category. For that reason, rent to own remains a viable option for many people interested in taking steps toward owning a home.

Home by JamesDeMers is licensed under CC0.

Marty Orefice

About The Author

Marty Orefice

Martin Orefice is a real estate investor who has been in the industry for over a decade. He has experience with rent to own deals from all sides—as a buyer, seller and investor. He created to provide the #1 resource where people can find information about all things rent to own.

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