Pros and Cons of Rent-to-Own Homes
It's no surprise that in a real estate market still swimming with foreclosures, short sales, and underwater mortgaged homes, that potential buyers are sometimes finding it difficult to obtain financing to buy a home. However some buyers are finding a way around that by investing in a rent-to-own home. Basically rent-to-own deals, also known as a lease-to-own, require buyers to pay extra rents each month plus up-front fees of about five percent of the purchase price. The regular rent presumably goes to the owner and the additional payments are used to buy down the price of the home. If this sounds like a to-good-to-be-true option, it's certainly not without its risks. Here are the pros and cons of rent-to-own homes.
A rent-to-own lease gives buyers a chance to build up down payments and to improve their credit scores so obtaining a mortgage or future financing is easier.
Buyers having trouble arranging financing can benefit from a rent-to-own lease according to Las Vegas Property managers.
Since most rent-to-own contracts are written to close in twelve to thirty-six months, buyers have a chance to experience the home and feel out the neighborhood to make sure it's a right fit for their future home needs.
If buyers fall behind in their monthly payments and are evicted, they lose any up-front fees and rent premiums they paid and their investment is gone.
Las Vegas property managers warn that if owner aren't able or willing to carry a buyer's loan, they'll have to apply for financing. However, if they aren't able to arrange for financing at the end of the rental payment, they could forfeit all the extra cash they invested.
Renters locked into a rent-to-own lease can be more susceptible to foreclosure scams. If the renters are unaware that the owner is going through a foreclosure and have been paying inflated rent payments, they'll be disappointed to see the bank reposes the home and lose their investment payment.
If you choose to invest in a rent-to-own home, Las Vegas property management companies recommend that you know exactly what you're getting into. Find out what all your upfront fees and extra rental payments are going towards. Requesting a report or writing two separate checks to track how much you've invested towards your down payment is highly recommended. And most importantly, make sure the contract conditions are clear because you'll want to protect yourself as best possible for increasing home prices, job loss, inability to find financing or anything else that could jeopardize the closing.
If you're looking to buy a home in Las Vegas or searching for a Las Vegas property management rental home, please contact the Simply Property Management-Paielli Realty, Inc. Team today.
Simply Property Management – Paielli Realty, Inc.
Search Our Listings!
We Make it Simple Not Complex