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Real Estate Explained | What is Rent to Own?

Posted by Colleen Kulikowski, Licensed Real Estate Salesperson (716) 650-0051 on Jul 1, 2011 in Cheektowaga Homes, Home Buyer Resources, Home Seller Resources, Real Estate Investors | Comments Off

If you are considering this option, you will need to pre-qualify with a lender, just like purchasing a home. Homes are not always listed as Rent to Own on the MLS, an experienced Realtor will need to be able search out home owners that may be willing to consider becoming the Bank. Although Rent-to-own is popular in many areas of the country, in Western New York, home owners are not as willing to become the banker.

WNY Creative Home Ownership Options

There are many reasons why people cannot purchase a Buffalo home right now.Some people may be able to afford the monthly payments, but not be able to afford the initial costs of purchase including down payment and closing costs.

Should you give up your dream of home ownership in Buffalo?

Absolutely not!

You have been saving to purchase your first Buffalo home.What if I could show you a way to own a home? Would you be interested?

You believe that it is going to be a few more years before you are ready to purchase a Buffalo home. You are saving everywhere you possibly can, explored every down payment assistance program and cutting unnecessary costs.Perhaps you have some credit issues, or not enough money for the down payment.You think it is hopeless that you will ever be able to own a home.This is the time to be creative!

Read Also:Do you have the credit score blues?

If you’ve always wanted to own a home in the Greater Buffalo area, in the one of the many wonderful communities but find yourself short money for a down payment, have you asked yourself “What about Rent to Own?”

With many Buffalo home sellers unable to sell their home; they are opting to place their homes in the Rent to Own market, in order to not go into foreclosure or short sale.This strategy actually works well for a lot of Buffalo homeowners since they get initial payments or deposits for the property. Each month they receive a certain amount as rental fee from the buyers.There are tax ramifications, so check with your tax professional to understand them before you select this option for selling your home.

Read Also:What is a short sale?

What’s rent to own?

The closest explanation we can give you is the concept of leasing a car. At the end of the lease (rental period), and you like the car during this period, you can proceed with purchasing the car.So you see it is the same thing with renting to own a home.

You can initially rent a Buffaloarea home, enjoy it and by actually living in the property, you can determine the actual conditions of the Buffalo house prior to buying it. The benefit of the rent to own home arrangement is therefore a good way of investing in Buffalo real estate.This way you can test drive the community and you may reduce the amount you need for a down payment for the purchase.

The contract and agreement are more complicated, so it is best to speak with an attorney regarding the process before proceeding.Usually this arrangement sets a certain percentage of the rent to be considered as escrow towards fulfilling the down payment for the purchase of the Buffalo home.The buyer benefits from the contract only when he decides to purchase the property.If the buyer does not purchase, the seller has all the right to the accumulated amount paid as rental. The buyer is not entitled to any of the money.

Why would a buyer want to Rent to Own?

Benefits Include:

Locking in the Sale price of the home
You can move in right away and start enjoying the Buffalo home now
While you rent, it gives you the time to repair your credit and build up your equity or down payment when you do purchase the home
Potential profit from appreciation if the home’s value increase over time
Increased buying power
Less liability and you pay no taxes on the home until you own it
Quick move in time

Rent to own home is an alternative means to investing in Buffalo Real Estate.By renting to own, you get into your Buffalo home for a minimal amount of financial outlay, you can reduce the amount you need for a down payment and you get to test drive the Buffalo home.

Read Also:Your rights as a renter

There are downsides to this option if you cannot qualify for a mortgage at the end of the lease, or the home’s value that you agree upon decreases during the lease.And although monies paid can be applied to a down payment to that home, it cannot be transferred to another house, so if you walk away you will not have that money to count on.So it is important that you read the contract very carefully to make sure you are confident you can live up to all the terms, such as paying your rent on time, every time.

Think this might be an option you would like to explore in the Buffalo area? Are you absolutely sure that you cannot afford to purchase a home in Buffalo?There are a ton of programs out there to assist buyers purchase a home.

Call us today at (716) 650-0051 or to schedule a confidential meeting to determine your Real Estate needs.

All Statistics are gathered from the Buffalo Niagara Association of REALTORS®.

Properties found on this Web site may be listed with a brokerage other than the owner of this site and are displayed here via the Internet Data Exchange (IDX) system of this broker’s MLS. All information deemed reliable but not guaranteed and should be independently verified. All properties are subject to prior sale, change or withdrawal. Neither listing nor displaying broker shall be responsible for any typographical errors, misinformation, misprints, and shall be held totally harmless. © 2011 Western New York Real Estate Information Services (WNYREIS), LLC. All rights reserved.