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What is Rent to Own and how does it work?

Rent-to-own combines renting with pursuing home ownership. Instead of simply renting for a few years to build your credit or save up for a larger down payment, we put you in a home that you intend to buy and set you up on a 24-36 month lease to purchase agreement. This means you are technically leasing the property from us, but you have the exclusive option/right to purchase it within the lease period, so you are treated as the home owner from day one and we work alongside you to help repair your credit and get you qualified for financing at the end. It’s as if you’re buying a home but the closing date is a year or two down the road instead of right away.

 

This program is most suited for people currently renting who want to own but can’t qualify for a mortgage due to credit issues, lack of credit history, or have income types that banks don’t like lending on (such as 1099 vs W2 income). Our focus is on move-in ready homes in working and middle class areas, so you won’t have to deal with initial repairs or bad neighborhoods. If you have enough money for a small down payment but have some black marks on your credit or no credit at all, then you’re a great fit. We don’t believe that your past bankruptcy, identity theft, or lack of credit should hold you back from achieving your dream of becoming a homeowner. We will put you on the path to home ownership within weeks or months rather than years, and we will help you get qualified.

 

How does this work and what can I expect? Here is an outline of our process to ensure a successful rent-to-own program so that everybody wins.

  1. Initial screening
    1. Who are you, what is your situation, why are you looking at rent-to-own, what area are you hoping to live, what type of home are you looking for, when are you hoping to move in, etc.?
    2. How much do you have saved up for a down payment? What is your current monthly rent? How much can you afford as a monthly payment to own your new home? (these are the most important factors for qualifying)
  2. Get placed on our tenant/buyers list
    1. You will be placed on our tenant/buyers list and we operate on a first come first serve basis, so when a property comes up you will have opportunity to view it based on your place on the list.
    2. When properties become available, they go quickly, but since you’re on the list you will have first dibs before the general public.
    3. Depending on a variety of factors, a property that fits your criteria could become available within a couple of weeks or a couple of months, so we will keep you up to date throughout this process.
  3. I like this property, now what?
    1. First, we’ll give you the address so you can drive by and check out the neighborhood, and if you like what you see initially then let us know.
    2. Second, meet us at the property and tour the inside. There may be others touring at the same time or it may be just you.
      1. Bring your checkbook because we’ll be collecting a deposit to secure your position. Deposit is non-refundable but will be credited toward your option consideration (like a down payment), which will be collected later once paperwork is signed.
    3. Third, discuss specifics of the agreement: purchase price, monthly payment, terms and conditions, option consideration (down payment), and date the agreement begins.
    4. Fourth, standard background check and rental application.
    5. Fifth, meet with a mortgage broker to verify and assess where you’re at currently and what you’ll need to do in order to qualify to purchase a property within the lease period. We have mortgage brokers we work with that understand this process who we can recommend to you, but if you have someone else, you’re free to use them as well.
    6. Sixth, sign paperwork on move-in day.
      1. Residential Lease Agreement: this is the main agreement, which states that we operate in a tenant/landlord relationship and spells out the terms. The lease will be for 24 months and can be extended for an additional 12 months if needed.
      2. Option to Purchase agreement: this states that you have the exclusive right/option but not the obligation to purchase this property at any point within the lease period. This secures your position, so we can’t sell it out from under you or arbitrarily terminate the lease.
    7. Seventh, congratulations! Here’s the keys and welcome to your new home.
  4. Throughout the lease period
    1. Maintain the terms and conditions.
    2. Have an owner mentality, not a renter’s mentality. Maintain the property well and treat it like a homeowner, which means you will be responsible for any repairs and maintenance $500 or less per incident. Since you aren’t obligated to purchase it and you don’t own it yet, we will cover any repairs over $500 per incident.
    3. If you want to make changes or improvements to the property, just let us know beforehand for approval.
    4. Continue building your credit and working with your mortgage broker. We also have credit repair specialists to refer you to if you want additional help. Bottom line is this: we want you to succeed and be able to purchase the home, so we are committed to providing you with the resources you need and structure this deal in a way that sets you up for success, but at the end of the day it will be up to you to take action.
    5. If life happens and you need to move out, notify us so we can make sure you end on a good note and are taken care of on the way out. We hope this doesn’t happen, but life can throw curveballs, so we’re committed to working with you and help you transition.
  5. Purchase the property
    1. Notify us when you’re ready to purchase and we’ll start the closing process with the title company and mortgage broker. Best part, there’s no commissions or realtor fees!
    2. Congratulations, you officially own the home! Best of luck with your future.