The Truth About Rent-to-Own Homes

Apr 5

Rent-to-own sounds perfect in theory: "Rent while working toward ownership!" But the reality? It's complicated. Let's break down how these deals actually work—and when they might (or might not) make sense for you.

**How Rent-to-Own Really Works**

There are two main types:

1. Lease-Option

You pay option money (1-5% of home price) for the right to buy later
Part of your rent may go toward the purchase price
You can walk away after the lease term

2. Lease-Purchase

You're contractually obligated to buy at lease-end
No backing out without major penalties

The Hidden Costs Most People Miss

Higher monthly payments (often 10-20% above market rent)
Non-refundable option fees (usually thousands upfront)
Maintenance responsibilities (you might pay for repairs on a home you don't own yet)
Price locks that could leave you overpaying if the market dips

**When It Might Make Sense**

✅ Your credit needs work but you're actively improving it
✅ You can't qualify for a mortgage now but will in 1-3 years
✅ The terms are transparent and reviewed by a real estate attorney

Red Flags to Watch For

🚩 No written agreement detailing all terms
🚩 The seller won't let you do a home inspection
🚩 The future purchase price seems inflated
🚩 You're responsible for major repairs during the rental period

The Bottom Line

Rent-to-own can be a creative path to homeownership—if the contract is fair and you fully understand the risks. Always get a real estate attorney to review the agreement before signing anything.

Need help evaluating a rent-to-own deal? I'm happy to look at the fine print with you—reach out anytime.