Why Rent to Own My Home Instead of Selling It?
May 9, 2017 by Marty Orefice | Real Estate, Rent to Own, Selling
Why Rent to Own My Home Instead of Selling It?
Buyers wonder: why is the homeowner signing up for lease with option to buy. They think it’s a scam because they don’t see the benefit to the seller. It may be difficult for the seller to see it too.
The easy answer is: life doesn’t wait.
The backstory is: renting to own your home can help you pay your mortgage when you have to move and start paying for a new one.
A few examples:
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Pregnancy
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Far Away Job Offer
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Time to Down Scale
You might be expecting a kid in the next nine months. You need a bigger home to accommodate your child and the sooner you can start moving, the better. The further along you or your wife gets in the pregnancy the harder the move will be. And you certainly want everything ready for when the baby arrives. It will be a lot more difficult to unpack when you’re already running low on sleep opportunities. More so, that baby is not going to wait for when you’re ready, it is going to pop out when it wants to.
Additionally, finances are going to be tight adding a new family member into the mix. Especially, if you are taking an unpaid paternity or maternity leave. You can’t afford to pay the mortgage on a home that’s just sitting there vacant in addition to your new home.
Your new job starts in just a few weeks on the other side of the country. You’ve got to get out there look for the right home and buy or rent it soon. Once you start your new job, you want to impress your boss. So, you don’t want to spend every night unpacking and setting up your new place.
The sooner you get out there the better, but you don’t have the money to pay for security deposits or down payments on your new place when you’re still paying them on your old place. It’s not like your current boss is going to advance your salary when you’re leaving so soon. And you don’t want your first impression on your future boss to be asking for money upfront.
Your kids have all left the nest. There’s no use keeping a shrine to them in their rooms. You want to downscale. Pay less every month in rent. While you technically could wait for someone to buy your home, the house you want to buy is available now, and may not be later. You can’t afford to pay the mortgage on both homes on your retirement checks. More so, why would you want to?
Rent to Own is a Great Solution
Sometimes the economy is just not ripe for selling a home. Many people can’t afford a down payment on one and others don’t have the credit score to qualify for a mortgage.
Or, it’s just not the right time of year for selling your home. Houses sell better in the summer months and those may very well have just passed.
Regardless of the reason, you might not have time to wait for your home to sell, but renting to own is an option that just about everyone can qualify for.
You can make sure that the rent payment covers most if not all of your monthly mortgage payment. And when you sell your home, you’ll be able to keep more of the profit because more of the property is paid off. By covering your mortgage payment with someone else’s payment, your finances are freed up to purchase a new home and to move on to life’s next great adventure.
Rent to Own: Possible Outcomes
Your tenant has agreed to pay premium payments and an option fee because he or she has the intent to purchase your home. At the end of the lease, your tenant will either purchase the home – win – or decide against it – still a win.
1. Your Tenant Doesn't Purchase the Home
If your tenant decides not to purchase, you will get to keep the option fee and any premium payments that the tenant paid. Then you can move on to finding someone else to rent to own or buy your home.
2. Your Tenant Purchases the Home
Congrats! You’ve sold your home. And, you got a bigger payout than you would have before because more of your mortgage is paid off. You may have even paid it off entirely!
Additionally, the market may very well have improved over the time that passed. Therefore, if your tenant didn’t purchase it, it will be worth more. If your tenant does purchase, and you’re contractual selling price included appreciation, you still get the extra profit!
Renting to own is a great option for when life takes you by surprise and you need a quick way to move on to your next adventure.
