Rent to Own

People often ask what the benefit to Rent-to-Own is for them.  The true benefit of our Rent-to-Own program is to get you into a home of your choice NOW, while you take the time needed to improve your credit and/or save up your down payment.  In order for this program to be successful, it is important to have a thorough understanding of how it works.  Of course, we will be there to walk you through the process every step of the way; however the following are questions that are often asked by potential Tenant-Buyers during the qualification process:

 

• What is the Initial Option and how much do I need to put down?
   

The Initial Option is like a down payment to start the RTO program.  It is required to demonstrate that you have something invested in the success of this program and that you have some financial footing to begin with.
The amount required varies depending on each unique financial situation; however we look for a minimum of 3% of the home’s buyout price. The larger your Initial Option payment, the better it is for you because it will lower the Option Payments you must make each month to accrue your minimum down payment amount. 

In order to start the program, an initial, non-refundable payment of $500 is required.  This $500 is applied to your Initial Option once a home is found and secured.

 

• How is the buyout price calculated?
   

The buyout price is calculated based on the listing price of the home today, the length of the RTO term and the average property appreciation rate in the market that the home is located in.  If the house you want is listed at $300,000 and the average home in that market has been appreciating at 4% per year, then the buyout price will be calculated at that rate over the length of your RTO term.  So if the term is 3 years, then the buyout price for this home will be $337,000.

 

 

• What are the monthly Option Payments?
   

Over the RTO term, you must accumulate a minimum down payment amount, plus closing costs for your buyout.  Your Initial Option will be the starting point for this amount, so the balance must be made up each month throughout the term.  So if you need to accumulate $15,000 by the end of a 3-year term and you start with an Initial Option of $10,000, then your Option Payments will be $140 per month ($5,000 ÷ 36 months). 

The monthly Option Payments are paid in addition to your regular rent payments.

 

• How is rent calculated?
   

The rent charged will always be in line with fair market rent in the area the home is located in.  A separate rental agreement is drawn up for the length of the RTO term, which outlines all the necessary details.

 

 

• What happens if I can’t purchase the house at the end of the rental term?
   

The action plan we put together for you is designed to get you into a mortgage qualification position by the end of your RTO term.  If you stick to the plan, you will have a greater chance of success.  Having said that, sometimes things happen during a RTO term that are beyond your control. 
It is important to note that your Initial Option and monthly Option Payments are non-refundable; however since we deal with private investors and not traditional lenders (banks or mortgage lenders) we have the flexibility to address issues on a case-by-case basis and do not have a standard clause that applies to every situation.
The situation would have to be addressed at the time, depending on the reason(s) you are unable to purchase the house.

 

• Who is in charge of the home’s maintenance?

 

As a homeowner would, you are responsible for all maintenance of the home and property for the duration of the RTO term and once the home is purchased at the end.  You are responsible for all repairs once you have purchased the property at the end of the rental term.

 

• Who pays for the home inspection?

 

You are responsible for the cost of the home inspection, to ensure we are only putting offers on homes you are serious about.  The home inspection is mandatory to ensure we are securing a quality home for you; which is important since the house will ultimately be yours when the program is finished.  Therefore, a home inspection should not be required again at the end of the term.
 

• Who pays for the property taxes?

 

During the RTO term, we pay the property taxes, since we are on title for the property during this time. When the term is up and you have purchased the house, you will be responsible for the taxes as the new home owner.

 

• What about insurance?

 

During the RTO term, we pay the insurance, since we are on title for the property during the RTO term. When the term is up and you have purchased the house, you will be responsible for the insurance as the new home owner.
During the RTO term you must have renters/content insurance.

 

• Who pays for the utilities?

 

As a homeowner would, you are responsible for the utilities including water, heat, gas, hydro, and any other utilities that may apply.

 

We hope you have learned a little more about the Rent-to-Own option for home ownership.

Again, the true benefit to our program is to afford you the time and direction needed to qualify for a mortgage by getting you into the home you want to purchase NOW, while you work on the things you will need to do anyway (improve credit, save up down payment, etc.) .

Remember, our program is designed for YOUR success.  The primary objective here is to make you a home owner, so we are not successful unless you are.

We are looking forward to working with you to make this a reality.

Please contact us do discuss this opportunity in further detail and get the ball rolling.