Not everyone who wants or needs to buy a home is able to do so right away. Even if you’re in a good financial spot at the moment, you may need time to rebuild your credit score or save up for a down payment. Obviously, it can be hard to save while you’re paying rent, so some potential owners 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 only make up a small portion of the market—about 5%—so it can be hard to find these properties. Unfortunately, prospective buyers also need to keep an eye out for illegitimate sellers, who may seek 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.

Look in the Right Places

Unfortunately, you’re probably not going 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 sellers prefer to lock in a purchase and sell their home in one transaction. In areas where the real estate market is competitive, few sellers want to drag things out by offering a lease.

You’ll need to look in transition areas—typically smaller towns with slower markets—so consider wish-list criteria that you’re willing to compromise. If you don’t have school-age children, look for areas with less desirable school districts. If you don’t plan to walk to shops and restaurants, look for properties a little farther afield. Be flexible, and try not to get your heart set on a certain neighborhood.

Find an Agent with Rent-to-Own Experience

It’s essential that you find not only a licensed real estate agent, but also one with specific experience dealing with rent-to-own transactions. A good agent can help greatly with the work of finding available properties through their own professional network and knowledge of the local market. They’ll also make sure you understand the terms and conditions of your rent-to-own agreement.

There’s a big difference between a lease-purchase agreement, in which you are under obligation to buy the home at the end of the contract, and a lease-option agreement, which allows you to decide whether to purchase the home 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 you sign.

Look for an Investment Firm with a Rent-to-Own Program

These programs are actually more like investment firms than brokerages, and they work with prospective homeowners to set up rent-to-own agreements on houses that might not otherwise be available for these contracts—that is, homes in more desirable areas. The firm will actually purchase the house and then lease it to you, giving you the option of buying at the end of your lease.

These programs reduce some of the risks associated with renting to own, but your rent payments will likely be more expensive than they otherwise would, as that is how these firms make their money. If you have questions, you can always talk to a real estate agent and have them on your side as you negotiate the program.

Contact a Seller Directly

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

Again, we recommend going through an experienced real estate agent, but these agents can always 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 up a deal.

Find a Landlord Who Might Want to Sell

Similarly, there are plenty of reluctant landlords out there. This is the type of owner who isn’t a landlord by trade, but nevertheless finds themselves with a single rental property that they haven’t been able 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 still renting it.

You can offer to do repairs and upgrades to the home you eventually want to own while you’re still under lease, freeing up 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.

Find Homes in Pre-Foreclosure

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

Reach Out to Family and Friends

Don’t be afraid to use your own network, as well. If someone you know is selling a home, ask if they’d be willing to enter into a rent-to-own agreement with you. In some senses, this can be risky, as doing business with friends and family can put stress on relationships. However, people who know you well might be more willing to overlook credit issues that might look bad on paper and trust that you’ll meet your end of the agreement. However, you’ll still want to get everything in writing and spelled out clearly.

Do Your Homework

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

Renters under these contracts may also have fewer legal protections, leaving the door open for unscrupulous sellers to take advantage of people who are 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, for example, fail to report your on-time rent payments to the credit bureau, robbing you of the opportunity 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. However, once you have all the facts, you may find that rent-to-own is the right path to home ownership for you.

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