Understanding Rent-to-Own Agreements
A rent-to-own agreement, also known as a lease-option agreement, provides a path to homeownership while renting. Here are key factors to consider:
1. Option Money and Rent Premiums
Understand that you'll typically need to pay:
- Option fee (usually 1-5% of purchase price)
- Monthly rent premium (goes toward purchase)
- Regular monthly rent
2. Purchase Price Agreement
Ensure the future purchase price is:
- Clearly stated in the contract
- Fair based on current market value
- Agreeable considering future market projections
3. Maintenance Responsibilities
Clarify who is responsible for:
- Regular maintenance
- Major repairs
- Property improvements
4. Contract Duration
Consider these timeline factors:
- Length of the rental period
- Purchase option deadline
- Time needed to improve credit score
5. Legal Review
Always have a legal professional:
- Review the contract terms
- Explain your rights and obligations
- Verify the property's legal status