Global Rent-To-Own Market | Pros and Cons of Rent-To-Own Agreement

Global Rent-To-Own Market | Pros and Cons of Rent-To-Own Agreement

Rent-to-own is an agreement between buyers and sellers/owners. In the contract, prospective buyers has permission to lease a property with an option to buy. This agreement is benefitted to both buyers and sellers. But both of them must understand the complexity of this contract.

Basically, Rent-to-own home is purchased through rental agreement done with home owner. Whatever, monthly payment you do, that will be reduced from the sales price of the house during the time of your lease.  After the lease time, which generally last for 1 to 5 years, you will have an option to purchase the home.

These deals are more common in slow real estate market, because it’s difficult for owners to sell their homes. This option can be great for renters, who are looking to own a house.

Pros and Cons of Rent-To-Own Agreement:

The tenant/buyers and landlord/seller have pros and cons for this agreement

Byers Pros and Cons:


If you are not eligible for mortgage immediately, then Rent-to-own agreement can give you a path to homeownership.

If you like specific property or home then Rent-to-own agreement guarantees you that no one can else purchase it.

Rent-to-own give you an opportunity to try your new neighborhood before you invest your big amount in buying the home.


If you miss a rent payment, cancel the contract, or you don’t qualify for the mortgage then you will lose all your money which you have spent in the agreement.

There is a possibility that the house value might go down over the time.

Seller Pros and Cons:


High-quality tenants easily get attracted towards the rent-to-own agreement, who might be also having interests in maintaining the property.

You potentially get the higher sale price when buyer purchase the property by collecting above-market rent each month.  


The tenant may decide not to buy a home, so you have to start over the sales process again.

If you need money immediately, then rent-to-own agreement is not for you, since it can take a lot of time, potentially a year.

If tenant damages your property or cause issue with premises, it can bring lot of headache to you being landlord.

Tenant could expose the defects of the property, once he starts living there. Later, he can demand for lower purchase price. 


Final Take Away:

A rent-to-own agreement is a deal, in which the owner commit to renting the property to the tenant for a specific period of the time, with buying option for tenant, before lease runs out.

This agreement helps you to improve your credit score much easier than buying property right away. You can always buy a home with a bad credit, but it will be best for you to wait until your credit score reach at least 629 and you will have a lower debt to income ratio, so you can avoid the overpaying on interests.

You should go for the rent-to-own agreement, only if you are confident that you will be staying in the house for several years. And it’s always been good idea that let your lawyer review the contract. Rather you can take the help of trusted Realtor and home inspector to navigate the entire process to ensure you are aware of the any potential problems that may take place during the leasing period. 

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