Phoenix Arizona Real Estate Blog, presented by ...

Sep. 3, 2006 - Rent to Own Homes

Tired of paying rent without building equity? Trying to purchase a home but daunted by the down payment involved? Rent-to-own, also known as lease option buying, might be the best route for you!

With a lease option, the owner generally collects a larger-than-normal initial deposit. This deposit is held by the owner and will be applied to the tenants' eventual down payment. Also, the monthly rent payments may be above the current market rates, but in most cases that additional rent also is applied toward the eventual down payment.

At the end of the option period, usually a year, the tenant then has the opportunity to use the accumulated money as a portion of their down payment and closing costs and purchase the home at a pre-determined price.

There are some risks with a lease option: 1) if the tenant decides not to buy the house, the owner keeps the additional deposit and rents collected. 2) the eventual purchase price usually is higher than current market prices because the owner is locking in a certain rate of appreciation. 3) unless specified in the rental contract, the tenant also could lose their additional deposit and rents if they're unable to qualify for a loan at the end of the option period.

Still, rent-to-own remains a viable option for many homebuyers who may not have the accumulated savings to cover a down payment and closing costs.

For more information on rent-to-own buying, e-mail me using my contact form or call me at 602-502-9693.

(c) Jonathan Dalton, 2006 / Jonathan Dalton's Arizona Homes