Understanding Rent to Own Property before Making the Agreement in Virginia
In increase in rent to own property arrangements can come up as a result of economic downturns in the real estate markets. As a result they are designed to help both landlord/seller and tenant/buyer when they are in a tough financial position. Before you sign a rent to own property contract in Virginia, you should completely understand the details surrounding this particular type of transaction.
There are many benefits that come with a rent to own property agreement, both to the buyer and the seller. If you are looking to own a home in Virginia but don't have the ability to secure financing the conventional way, a rent to own home is a good option for you. If, on the other hand, you are a landlord wishing to sell property in Virginia but can't seem to get a buyer, this is also a good option. A rent to own property agreement in Virginia gives a tenant the satisfaction that the rent paid is going towards getting him/her a personal home. Rent to own homes usually offer rent credits which eventually reduce the purchase price.
How it Works:
A rent to own house in Virginia is just like any typical lease agreement, but has an important addition. At the end of the lease period, the tenant is given a choice to buy the house from the landlord. The price is usually determined at the beginning of the agreement and does not change regardless of any fluctuations in the market. The buyer must pay an amount of money known as the ‘option fee' in order to get a chance to buy the house at the end of the lease period. This is basically a down payment on the purchase price. The amount of option fee is calculated as a percentage of the purchase price and it is negotiable. In Virginia, it usually ranges from 2.5% to 7% of the purchase price. This amount is deducted from the purchase price when the tenant decides to buy the house.
Additionally, a certain percentage of the rent is considered as down payment for the final purchase price of the house. This amount is known as a "rent credit". It is negotiated between the tenant and landlord and should be given to the tenant on timely payment of rent. If the tenant is late on making the rent payment, then he/she is not awarded any rent credit for that month.
The maintenance cost of the house usually falls to the tenant. If you get a rent to own property in Virginia, you should ensure that all the repairs the house needs are carried out since, after all, you will eventually own the house. Major repairs in order to make the house habitable should be done by the landlord.
The benefits of this arrangement are not only enjoyed by the buyer. The landlord also gets many benefits from the arrangement such as:
• Getting a buyer for the house during market downturns.
• Landlord retains ownership until the tenant buys the property.
• Landlord does away with paying mortgages and other expenses if it is a second house.
• An increase chance of finding a buyer as there are typically many more renters than buyers in a given market.
That is just a tip of the iceberg when it comes to benefits of the arrangement for Virginia homeowners looking to sell their home. Now that you know all the important details about rent to own property, you can make the right decisions. If you are a landlord and want to advertise your property as a lease to own, rent to own, rent to purchase or lease to purchase property, click here to begin advertising your property on the premier rental website, RentalAds.com. For renters looking to find a rent to own home, use the links above to find your dream home.