Pros and Cons of Rent-to-Buy/Rent-to-Own and Real Estate
|November 24, 2009||Posted by Sandie under Real Estate|
For the next few blog posts, I’d like to explore the benefits and drawbacks of renting real estate with the option to buy. Today: the pros for the renter/buyer.
- Try it before you buy it. When you’re investing in a new home or a new business space, you don’t want surprises. Surprises may include poor house construction, noisy neighbors, basements that flood easily, or bad plumbing (but there’s really no end to the possible unpleasant surprises in real estate). Renting to buy helps eliminate surprises—because it gives you the option to spend a good amount of time in a property before you make your final purchase. You get to try it before you buy it.
- Get your credit in order before you buy. If you don’t have the strong credit you need for a home loan—but still want to settle into a house—rent-to-buy options give you the opportunity to live in the home of your dreams, while you work toward improving your credit. When you do have stronger credit, you can get your loan—and pay the down payment on the home you’ve been living in all the while.
- Rent goes toward your down payment. Speaking of down payments—in many rent-to-buy agreements, your rent counts toward your down payment if you do choose to buy. At least in theory, this means that with rent-to-buy plans you could end up spending less than you would have had you chosen to rent and then pay the down payment for a different property.
Those are a few thoughts on the pros. Next up—the downsides for the renter/buyer…