Which means you are sick and tired of renting. You would like to own your own house, but you will donrrrt you have much of a deposit. Without a doubt you’ve heard of “the perfect solution” – rent to have. But would it be really as perfect as everyone says – hardly. There are several secrets about rent to own properties you will want to be familiar with. They’re most overlooked aspects of a rent to possess deal. So let us get the truth about lease to possess homes.

How Rent to Own Works

Very first how it operates. You rent a property with all the choice to buy. You will have a lease which will typically last between 2-3 years. The vendor will even require that you put some kind of upfront advance payment or option fee. This is usually 1 to 7 % of the arranged cost. Besides the rent, you will pay what is known as a Rent Premium or Rent Credit. This extra amounts put for the cost of your home.

Let’s see what sort of Salt Lake City, Utah rent to have would work out. As of January, 2017 the median rent to get a 3 bedroom, 2 bath house in Salt Lake City is $1,500. The additional amount that you’ll pay for the purchase is negotiable. Generally you should expect to spend 20 to 50% across the market rent. For the sake of argument, let’s choose 25% that is about average. So you’ll pay $1,500 per month in rent with an additional $375 on the purchase. If the lease lasts 3 years, you would have a rent credit in the level of $13,500. Median home values in Salt Lake City are $280,000. In the event you paid a 3% option fee of $8,400 and combined that with the rent credit, you’d have a down payment of $21,900 or 7.8%. Beneficial.

The Truth about buy to rent

Do you wish to understand the dirty little secret few buyers inside your position realize? In case you decide that you’re unable or not wanting to choose the house after the lease agreement, you forfeit Every one of the money that. That features the Rent Premium along with the option fee. Gone. Everything. The seller keeps all the money and you reach call a moving van and start throughout.

Selecting surprised on what often this occurs. The purchaser may run into some problems with the house and so they want out. Money lost. The buyer is probably not capable to be eligible for home financing. Money lost. Or, think the seller fails to spend the money for mortgage and the property gets foreclosed on. Yikes! Money lost.

So, before you race to snap in the closest rent to own or lease option property, make sure you do your research and possess the house inspected. Start working using a lender in order to be entitled to home financing and for goodness sake, make sure you love the house.
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