As mortgage laws become stricter and people find it increasingly difficult to qualify for their own mortgages today, rent-to-own is quickly becoming an option that many people turn to.
BUT, what makes a rent-to-own program great for tenant-buyers or rent-to-own?
Truth be told, the best and most successful rent-to-own tenant-buyer is someone who already has an owner mindset.
Young, old, single, married, families, divorced, self-employed or newcomers to the country. No matter what category you fall into, rent-to-own might be a good option for you if you haven’t been able to get a traditional mortgage as a result of credit problems or a lack of down payment. Rent-to-own will give you the opportunity to choose your own home, the time to repair your credit, and the discipline to accumulate your down payment while building property value, BUT it’s not a piece of cake for everyone. Although rent-to-own can work for many types of situations, here are the mindsets of people who will succeed in rent-to-own:
1. Eager and motivated to be homeowners because they understand that real estate is one of the best ways to start building your wealth.
2. Determined to repair any credit problems they face
3. Understand the benefits of stock appreciation
4. You take pride in maintaining and caring for your home
5. You are tired of spending your hard-earned money on rent, which only enriches the landlord.
Even with the right mindset (which is half the battle), you still need to align with the right leasing program or model. There are many options available (tenant first, where you select your home, ownership first, where you select a home from a list of available homes, no money down, etc.), so the best advice is always to do your due diligence with people. or company that offers rent-to-own and rent-to-own programs available. This is the key. A great rent-to-own program can be defined by many things and is likely to be subjective, but for me, these are some of the things to look for:
1. A program where you receive support in your credit repair efforts. Two or more heads always think better than one. Even having someone you trust to share ideas or answer questions sometimes makes a difference.
2. A program in which enough of your monthly payment goes toward your down payment or option credit so that you can increase your down payment to 5% or even better, 10%.
3. You must select your own home. Although it is a “home” for your family, it must fit your needs and budget…and you must LOVE it. How likely are you to succeed if you don’t enjoy being there or being in the neighborhood?
4. Transparency. Are all numbers provided to you in advance? Avoid surprises later by making sure you agree with the numbers before committing to the property.
5. Feeling of ownership. Don’t go into a program where you are going to “own”. One of the best things about rent-to-own is that you have the freedom to update the property and make it your own. It should not be micro-managed by owning a home.
