What Exactly Is “Rent To Own”?
Real estate that is being advertised rent to own has an attractive allure for those who are unable to secure lender financing and purchase a property outright. In its simplest form, those who enter into a contract for real estate that is being sold rent to own have the option to purchase a property within a stated time period. These individuals generally purchase a property when they are able to secure lender financing or come up with the liquid capital to close the deal. In most cases, real estate that is being advertised rent to own is typically only done during economic downturns, as the sellers of such properties are motivated to part with their real estate or at least end up collecting monthly rental payments. Those who are looking for rent to own real estate in Columbus, Ohio should understand both the pros and cons to entering into such a contract.
The Advantages To Entering Into A Rent To Own Contract In Columbus, OH
Those who are looking to purchase property through a rent to own contract in Columbus, Ohio can use this rental period to improve their credit rating, and eventually purchase a property through lender financing. In some cases, this type of contract works out perfectly, as potential homeowners are able to convince a lending institution of their credit worthiness and end up purchasing a property in this fashion. However, in many cases, the time period required to purchase a property doesn’t allow enough time for potential homeowners to improve their credit rating, secure a loan, and take full advantage of a rent to own contract. These individuals often have to either restructure the contract after this time period or simply walk away from the the deal, losing any deposits and equity they built up.
Cons To A Rent To Own Contract In Columbus
In many cases, those who enter into a rent to own contract have to submit a nonrefundable deposit to the property owner. These individuals then have a period between one to three years to secure lender financing. If potential homeowners are unable to secure financing before this time period runs out, they will generally default their deposit without receiving anything in return.
In addition, the rental rates in a rent to own contract are often higher than the going market rates in the area, as part of this payment is considered a rental credit and is placed into escrow. This rental credit generally goes to the eventual down payment when it comes time to purchase a house, if an individual exercises their option to purchase a property. On the other hand, those who aren’t able to purchase a property at the end of the contract will forfeit these payments to the owner. After a contract is over and a potential buyer is unable to purchase a property, the owner of a property now has the right to sell it or rent it to another party.
Avoid Rent To Own Scams
Scammers like to take advantage of uninformed individuals through rent to own contracts. Those who are considering entering into a rent to own contract in Columbus, Ohio should consult with a real estate professional in the area in order to avoid such unscrupulous tactics. Individuals who want to learn more about rent to own property are advised to contact Blue Chip Development Group for more information.