If you're in the market to become a homeowner, but you have bad credit or another financial hurdle that's keeping you from getting approved for a traditional mortgage, you might consider looking at rent-to-own homes. Rent-to-own homes may be harder to find than your average listing, but they are out there. To that end, below is a guide on how to find rent-to-own homes. Keep reading to learn where you can find rent-to-own listings in today's real estate market.
Hire a knowledgeable real estate agent
When you're in the market for rent-to-own homes, working with a real estate agent who's experienced in lease purchase transactions is one of the smartest steps you can take. On the one hand, your agent will know how to set you up on an MLS search that will deliver properties that fit your needs. On the other, they will have experience negotiating a lease purchase agreement, which is different from a regular agreement of sale.
In truth, having a professional on your side to help with the negotiations is critical. With a rent-to-own contract, not only do you have to negotiate a normal rent payment and lease period but there's usually also an option fee that needs to be discussed. The option fee is typically a nonrefundable deposit, and it's what allows you to decide whether you would like to move forward with purchasing the property at the end of your lease. Having an agent on your side will help ensure that your interests are being fairly represented.
In terms of how to go about finding such an agent, your first step is to do some research. Search for agents in your area who have experience working with buyers who are in the market for rent-to-own properties. Then, during the interview process, get the details by asking them questions like the following:
- How many rent-to-own transactions have they done?
- How familiar are they with writing up a lease purchase agreement?
- What advice do they have for you as a buyer who's looking for rent-to-own homes?
Search rent-to-own websites
They say there's a website out there for everything, and rent-to-own homes are no exception. Luckily for you, if you feel comfortable searching for potential rental properties on your own, there are a handful of website platforms out there that are geared toward helping connect soon-to-be buyers with the owners of rent-to-own properties.
We've listed them below for your consideration:
Though foreclosure.com might sound like it's geared toward those who want to buy foreclosures immediately, there's an entire section of the site dedicated to rent-to-own properties. The page allows you to narrow your search by state and county. However, once there, you can also filter your search results by your anticipated sale price range, the number of bedrooms and bathrooms, or property type.
Rent To Own Labs
As the name suggests, Rent To Own Labs is another great resource for finding available rent-to-own listings. This site lets you narrow your search by city, state, and zip. While you do have to register with the site to access all of the available details about a particular rental property, once you do, you'll be given access to the listing price as well as contact information for the current property owner.
Finally, there is HousingList. Like the other rent-to-own websites, this one lets you narrow down your rental listing search by location. Again, you'll have to register to access all the information about a particular property. However, registering also gives you access to additional features, like the ability to access neighborhood demographics and check your credit score.
Contact the owners of lingering properties
If you don't have any luck with the rent-to-own options that are currently on the market, another option is to contact sellers and rental property owners who currently have properties on the market. In particular, it's a good idea to focus on listings that have been on the market for a while. Since they haven't had much interest, they may be more open to the idea of your renting from them for a while before ultimately trying to buy the home.
If you're thinking of going this route, it's best to get an agent or real estate lawyer involved in the process. Few people are familiar with the concept of rent-to-own real estate, and it's best to have a professional do the explaining. Keep in mind that, once you find a property, you may have to offer the owner an incentive to get them to come around to the idea, especially if you'd like to do any type of owner financing.
If you need suggestions on how to sweeten the deal, most rent-to-own properties come with a higher rent, but depending on the terms of your lease agreement, a portion of that rent could end up going toward your down payment at the end of your lease term. Alternatively, you could offer to pay the seller a deposit of option money as mentioned above.
Tap your network
Lastly, if you're still having trouble finding rent-to-own properties, you could always tap into your personal network of family and friends. In this case, you'll want to reach out to any connections who are landlords and let them know about your plan to buy a home. In fact, having a personal connection with your landlord might actually be to your benefit. Since they know you, they might be more willing to overlook any flaws like bad credit while you work to get approved for a traditional mortgage.
That said, if you do end up renting through a friend, it's still important to keep things official. The two of you should have an agent draw up a rental agreement that specifies the lease term, the monthly payment amount, the purchase price, and the expected down payment. It is much better to have those details spelled out in writing than to let confusion color your relationship later on down the road.
The bottom line
Knowing that rent-to-own properties exist is one thing. Actually finding a rent-to-own property to buy is another. With that in mind, consider this your guide to finding rent-to-own properties in your area. Use these tips to help you get started on the path to finding the property that you'll one day be able to call your own.
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