We do have properties that we manage that are available for lease/purchase (also known as rent to own). We wanted to provide some additional information for those that are interested in that option:
The monthly rental payment will vary depending on your down payment. The larger the down payment the smaller your monthly rent payment would be. The payment is comprised of a base rent rate, which remains the same throughout the term of your occupancy, as well as the actual cost of the insurance and taxes on the home. As these costs increase over time it will increase your payment, usually this increase is minimal.
Each property has a specific minimum down payment amount, you can of course pay any additional amount over and above the minimum. The down payment is in reality actually an “option fee” which means you are purchasing the right to purchase the house at a particular price (asking price less option fee, example: Sales price is $100,000, paying a $10,000 option fee grants you an option to purchase the home at $90,000) so it is not refundable. The base rent rate declines with larger down payments, just as would be the case with a typical mortgage. A portion of the base rent is credited towards the purchase of the home, either a specific flat amount (example: $200) or a calculated amount that would change monthly like a typical mortgage (starts very small (~$60) and gets a little bigger ($1-2) every month as the balance decreases).
The intention, and best use of a rent to own arrangement, would be to give you time to fix your credit while you’ve got the purchase price locked in and reducing your effective rent because of the credit towards the purchase. WIthin a few years of credit repair you should be able to qualify for a mortgage and pay off the balance of the rent to own with the new mortgage. It is not advantageous, nor is it recommended to attempt to use rent to own as permanent financing. The new mortgage should reduce your monthly payment amount on the home in almost all cases.
Aside from the credit towards the purchase of the home, the other major difference you should be aware of when doing a rent to own is that you are responsible for maintaining the home. So if anything breaks it’s up to you to fix it, as opposed to a normal/typical rental agreement where the owner would be responsible for repairs and maintenance.