One of the popular creative financing methods is “Rent to Own”. Also known as Lease to Own, it allows tenant to buy the property at the end of a predetermined term for a fix price. In some cases, landlord collects a deposit upfront to secure the transaction and offers a rental credit to help the buyer to accumulate down payment towards the purchase price. In other cases, deposit (or down-payment) is not required. This depends on the relation, payment record, and credit history of the tenant/buyer.
Rent to Own is a winner deal for every party involved. It helps investors (or landlords) to make money even in a downward economy as well as tenants with bad credit who cannot qualify for a mortgage. One of the biggest advantage for tenant is to accumulate savings with rental credit compare to only renting. That way moving every year will be postponed until the minimum required down payment saved and credit is recovered.
Financing a house with traditional ways looks quite confident compare to Rent to Own because of its creative aspect. This could be a deal-breaker for anyone. But with enough due diligence any contract could be safe for parties involved. You should consult your lawyer before agreeing on contract terms on paper. By paying a small fee to your attorney can save you thousands of dollars and precious time over a conflict you probably couldn’t notice in fine prints.
Would you rather go to a traditional lawyer or somebody who can understand creative financing? You know the answer. Ask your lawyer whether he experienced in Rent to Own. You can also ask for examples and references you can talk to. Confirm their legal experience with these people. That brings confidence to the deal.
Starting from basic information about the property you can have an idea about the past. There could be many reasons behind the selling of the property. This can bring you negotiation power when writing your offer. After writing your offer a security deposit will tie the property while the legal process continues. It’s important to send the check via a trust account. Your lawyer can deal with other party while final conditions are met. A clause in contract will always help you to withdraw your offer in a last minute problem. Make sure the title is clear and ready to be transferred when time comes.
Overall Rent to Own is perfectly legal practice and makes sense for people with bad credit or no down payment. With correct due diligence, it is a creative real estate solution for many people in need.
Learn more about Rent to Own. Stop by my site where you can find out all about Rent to Own Houses in Calgary and what it can do for you.
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