Rent to Own Homes

Click here to read the following article: Rent to Own Homes.

Astra's Comments:

Rent to own homes give people time to strengthen their credit or save more money for a down payment and also gives time to renters to decide whether or not they like the are and the home - however, if they decide not to continue with the rent to own purchase, they pay a price.

The example of Chris and Sarah Kane used in the article doesn't really apply here in Canada.  In summary, they were saying that they pretty much lived expense free for a year because all the money was eventually used towards their down payment.  However, they forgot to mention that they bought the property at a future inflated price.  As described in the article is not how a rent to own situation works.

How Lease-Options Actually Work:
What they were talking about was the Californian market, which is completely different than the GTA Market.  In Toronto, there is a company that specializes in "rent to own" situations.  They work with a group of investors that actually purchase the property for the renter (soon to be home owner).  Here is how it works step by step:

1. Credit check on renter (soon to be home owner).  This is to analyze their initial credit and financial situation to determine if a rent to own situation will work with the client and whether or not an investor would be interested in the deal.
2. If everything is good to go, we start shopping for the rent to own client like we were purchasing the property.  We find a home that suits what the renter wants and will be happy with.
3. We purchase the home, but under the investors name with a side contract of rent to own.  This is done through lawyers and is between the investor and the rent to own client.
4. The renter pays the monthly expense plus an addition rent which is worked out in the contract to save towards the down payment towards the purchase of the house.

Here are some points on rent to own homes:

• The renter agrees to lease the house for a pre-determined amount of time, typically 1-5 years.
• The renter pays an upfront consideration fee, which is typically 5% of the purchase price. This money is held as a deposit and is non-refundable.
• The renter pays an elevated monthly rent (as explained above)
• The contract locks in a purchase price
• The renter may be able to purchase prior to the date on the contract

If you have any additional questions on rent to own homes or decide that this "purchase plan" would work best for you, please don't hesitate to contact me.

Sincerely,

Astra Mulawka
Better Homes and Gardens
Real Estate - Signature Service
Office:905-896-4622