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How To Find Rent-to-Own Homes

Prospective homeowners unable to purchase a home outright may be able to find a house they can lease until they’re ready to buy. Learn how to find rent-to-own homes with our list of eight simple tips.

Author Image Written by Brenda Woods Updated 03/05/2024

Not everyone who wants to buy a home is ready to do so right away. Even if you have a steady income, you may need time to rebuild your credit score or save for a down payment. Saving while you’re paying rent is hard, so some aspiring homeowners choose to enter rent-to-own agreements. Under the terms of this contract, a portion of your monthly rent essentially goes to your down payment, and you may receive rent credits on the eventual purchase price of the home.

However, rent-to-own homes make up just a small portion of the market—about 5%—so finding these properties is difficult. Prospective buyers also need to keep an eye out for illegitimate sellers who try to take advantage of the complicated contracts that govern this type of transaction. With that in mind, we’ve compiled a list of eight tips to help make your search for a rent-to-own home a little easier.

Why Would Someone Get a Rent-to-Own Home?

There are several reasons why a rent-to-own arrangement may be preferable to buying a home outright.

  • To shore up your finances: If you have the income to afford a house but don’t have the credit or down payment for a favorable mortgage, a rent-to-own agreement may be preferable.
  • You love your current place: If you’ve been renting a home for a while and love it, you could approach your landlord about a rent-to-own agreement to keep the home.
  • Experience: Renting-to-owning is good practice for aspiring homeowners. You won’t have all the responsibilities of homeownership but can make improvements and understand the burden of home maintenance.

1. Look in the Right Places

You’re unlikely to find rent-to-own properties in the most desirable locations. The rent-to-own process essentially turns a home seller into a landlord, and most people prefer to sell their home in one transaction and pocket the proceeds. In areas where the real estate market is competitive, few sellers want to drag things out by offering a lease.

The best places to look in are transition areas—typically smaller towns or up-and-coming neighborhoods. If you don’t have school-age children, look for areas with less desirable school districts. Be flexible and try not to get your heart set on a certain neighborhood.

2. Find an Agent With Rent-to-Own Experience

A licensed real estate agent with specific experience on rent-to-own transactions is crucial. A good agent can help you find available properties through their professional network and knowledge of the local market. They’ll also make sure that you understand the terms and conditions of your rent-to-own agreement.

Note: There’s a big difference between a lease-purchase agreement, in which you’re under obligation to buy the home at the end of the contract, and a lease-option agreement, which lets you decide whether or not to purchase when the lease is up. A real estate agent can walk you through the terms of both options and ensure that you understand what you’re getting into before signing.

3. Look for Investment Firms With Rent-to-Own Programs

These organizations function more like investment firms than brokerages, working with prospective homeowners to set up rent-to-own agreements on desirable houses. The firm will purchase the house and then lease it back to you, giving you the option of buying at the end of your lease.

These programs reduce many risks associated with renting to own, but your rent payments will likely be steep. If you have questions, talk to a real estate agent and have them on your side as you negotiate the program.

4. Contact a Seller Directly

If you can’t find rent-to-own opportunities that fit your needs, you may be able to create them. When a home is advertised as rent-to-own, it’s usually because the property has been sitting on the market for a long time. A seller who’s struggling to find a buyer might prefer having a renter over making no money at all while the home sits on the market.

Again, we recommend going through an experienced real estate agent who can reach out to the seller on your behalf. They’ll know how to make attractive offers that benefit both the buyer and seller. Even if the home isn’t currently listed as rent-to-own, you may be able to strike a deal.

5. Find a Landlord Who Might Want to Sell

There are plenty of reluctant landlords out there. This is the type of owner who isn’t a landlord by trade but finds themself with a rental property that’s been hard to sell. As a rent-to-own buyer, you have something to offer that regular tenants don’t: the motivation to fix up the home while you’re renting it.

You can offer to do repairs and upgrades to the home while under lease, freeing the landlord from that responsibility. The landlord also has the “escape hatch” of knowing that you’ll take the home off their hands at the end of the agreement.

6. Find Homes in Pre-Foreclosure

Another group of sellers who may be open to rent-to-own agreements are those with pre-foreclosure homes. While you can’t set up such an agreement once the foreclosure process has started, you can reach out to sellers who are facing it. Online portals like Foreclosure.com allow you to browse listings for these homes and find sellers’ contact information.

7. Reach Out to Family and Friends

Don’t be afraid to use your own network. If someone you know is selling a home, ask if they’d be willing to enter into a rent-to-own agreement with you. Doing business with friends and family can put stress on relationships but people who know you well might be willing to overlook credit issues. However, you’ll still want everything spelled out clearly in writing.

8. Always Do Your Homework

Any how-to list would be remiss without offering a word of caution. Rent-to-own contracts are complicated documents, so it’s worth having a licensed broker and lawyer look over them before you sign. This applies no matter how you find the home or how well you know the seller.

Renters under these contracts may have fewer legal protections, leaving the door open for unscrupulous sellers to take advantage of those still rebuilding their credit. The worst-case scenario is paying thousands in rent to a “seller” who never actually owned the property in the first place. However, even sellers who aren’t scam artists may fail to report your on-time rent payments to the credit bureau, robbing you of the chance to rebuild your credit. These are issues that experienced real estate agents and lawyers can help you prevent.

The old saying is true—if a deal seems too good to be true, it probably is. Protect yourself and your credit by consulting with experts before entering a rent-to-own agreement. Once you have all the facts, though, you may find that rent-to-own is the right path to homeownership.

FAQ: Rent-to-Own Homes

How does a rent-to-own agreement work?

Rent-to-own agreements work by being contracts that let you rent a house while moving toward ownership of it. You’ll pay a higher monthly rent and be responsible for maintenance and repairs, but will at some point gain ownership of the property.

Why would someone get a rent-to-own agreement?

A rent-to-own agreement may be a good idea for those who have the money to buy a house but lack the credit score to purchase one. It may also be a smart move for those who love their current rental property and don’t want to leave as they transition to homeownership.

Where can you find rent-to-own homes?

Rent-to-own properties aren’t very common and are generally located in smaller towns or up-and-coming neighborhoods. You’re unlikely to find rent-to-own homes in the most desirable areas of popular cities.

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