I've read recently that rent-to-own style investment is a solid pick for working class communities. The Wall Street Journal and other publications have suggested it as a win-win situation for working class areas. The landlord how can afford to buy starter houses then sets up a rental agreement where the tenant is renting toward ownership. This way, the tenant does not need a bank loan or to pay it all at once, but the landlord is still getting a solid return on the investment. These are typically single family, single level starter homes. The landlord still has maintenance responsibilities, but the tenant has a little more freedom in making the house a "home." What do you feel about the structure of a rent-to-own investment? I am interested to see people's thoughts on how much capital it would take to get started. Has anyone set up a rent-to-own situation or maybe rented to own? I would also be curious about the average length of a lease agreement.
My sister-in-law entered into a rent-to-own lease contract some years back. The house was situated in a 150-square meter lot fronting a narrow side road. It was a compact house with a garage for one car. Instead of renting an apartment (in the same league) for 4,000 pesos, the lease contract required her to pay 15,000 pesos for 25 years. After a year of renting and computing the costs, my sister-in-law gave up the house and moved to an apartment, a bigger place with 2 bedrooms rented for 5,000 pesos. She said the rent-to-own house is so small for them.
Yeah, the UK government has started a scheme where you part rent-part buy your property. It's more expensive overall, but the monthly cost is a lot cheaper. Given the length of a standard mortgage, I think it's pretty worthwhile for a lot of people. I suspect the lack of uptake over here is just that folks aren't well acquainted with this kind of arrangement, but that'll change in future I suspect....
See that's the thing I wonder about rent-to-own. It looks good on paper, but when the renter does the math, I bet it works out more in favor of the landlord. I doubt there is a lot of negotiation as a renter, so it seems that you'd be paying full price on the house over time, while the owner reaps the benefits every month. I know life isn't about being egalitarian at all times, but I often wonder if rent to own pushes a system that is not much better than just temporary apartment rental and saving for a dream house you actually want down the line.
The deal will always work in favor of the landlord due to the inherent risk involved. The clientele interested in this type of arrangement usually do not have the resources or credit to purchase a home through a traditional mortgage.
I've always wondered about that rent to own thing. I don't know much about it at all though so I'd have to look more into it. But it seems like something I'd be interested in doing if it's kind of like making payments to own a house in the first place like a lot of other people do.
The first thing to do when thinking of owning a property is to get a good job that pays good. Unless you are from a rich family, you need to have a job that would give you a steady income so you have the resource to pay the installments to the mortgage. There are lucky people whose parents give them the funds for down payment but there are those, like what happened to me, who waited for a long time in saving enough for a downpayment. This coming year of 2016, we will be paid up with our house mortgage.
A lot of schemes that try to fuse two sorts of contracts together often end up being the best of none, and the worst of both. This seems to be the consensus on "buy to let" here in the UK. I actually looked into it about a decade ago, but the numbers just didn't add up.
I have always thought that rent-to-own properties are a much better deal than renting an apartment which will never be yours even after spending money on it for years but when I read your post, I realized that rent-to-own is way too expensive for the quality of property you are paying for. Sadly, ome people do get caught in the trap of owning a property through this kind of method because of the staggered basis of payment that it entails. Nowadays it's really hard to immediately provide a hefty sum of money for down payments alone on real estate properties so as expensive as it is, I guess some are left with not much choice if they want to own their own real estate property.
