Mortgage rates have slowly started to normalize in recent months, but that doesn't make things easier for all prospective homebuyers. If you're one of those people who's desperate to buy property but struggling to secure financing, there are other options.
Rent-to-own homes are one way to fastrack homeownership if you aren't ready to commit to a mortgage. They're a little more complicated than the alternatives, but well worth investigating if you want a head start toward owning a place of your own.
Read on to find out more about this alternative route to owning your dream home.
Rent-to-Own Homes Explained
When a tenant enters into a rent-to-own agreement with a property owner, it allows them to purchase the home at the end of the lease term. Instead of a regular security deposit, the tenant pays an option fee when they sign the lease.
This amount is most often equal to around 15 and 5% of the home's value or purchase price. After that, the landlord collects rent from the tenant as usual, except a portion of the rent amount goes toward buying the home.
In South Carolina, these agreements are not regulated by the Landlord Tenant Act. Instead, lease-to-own properties fall under the Consumer Protection Code.
It's vital to consult a lawyer while negotiating a rent-to-own arrangement to ensure clarity on both sides.
Greenville Rent-to-Own Options
U.S. real estate law allows for two kinds of rent-to-own agreements. These are:
Lease-Purchase Contracts
At the end of these leases, tenants are compelled to buy the home. If they change their mind, the property owner can take legal action against them.
These leases compel the tenant to buy the home when the lease agreement ends. Lease-purchase agreements are regulated under Virginia law.
Lease-Option Contracts
When a lease option contract expires, the landlord simply gives the tenant the first option of buying the home. They aren't forced to buy it, but they will lose all the extra money they've paid toward purchasing the home.
Pros and Cons of Rent-to-Own Agreements
A shortage of affordable homes in Greenville can spell difficulties for eager home buyers. If you come across your dream home but aren't in a position to finance it yet, a rent-to-own agreement could be a good option for you.
These agreements can help you:
- Lock in a good purchase price
- Improve your finances before buying
- Save for a down payment
There are also some negatives associated with these agreements. Often the tenant must take on additional maintenance responsibilities and costs.
Rent prices are usually higher than usual with rent-to-own agreements, too, and the tenant has no guarantee that they'll receive finance when the lease agreement expires.
Maximize Real Estate Opportunities in Greenville, SC
Rent-to-own agreements can fast-track potential buyers' home ownership aspirations, but they also have a few drawbacks. A property manager can help landlords and tenants ensure a win-win arrangement with these types of leases.
PMI Southern States is a well-established property management company based in Greenville, SC. We provide exceptional services for landlords, tenants, and investors, based in our local area.
Our services include a full range of services to help you navigate the intricacies of rent-to-own homes as well as traditional property sales and rentals.
Discover an easier way to make the most of your rental and homeownership options in SC.
