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Should You Consider a Rent-To-Own Property Agreement?

There are several ways to find housing opportunities, whether you’re looking to buy, rent, or even rent-to-own. After all, getting a mortgage and financing a home these days can be difficult. As such, some potential home seekers choose to explore a rent-to-own agreement. Read along as we discuss what rent-to-own means, how it works, and the pros and cons. 

Contents of This Article:

What Does Rent-To-Own Mean and How Does It Work?

Buying a home in 2023 is challenging and too expensive for many people. However, if you’re looking to buy a home eventually but can’t quite afford it, consider a rent-to-own agreement. A rent-to-own home is a unique arrangement that allows you to purchase the home after renting it for a few years. 


Essentially, when you rent to own a home, you have a standard rental agreement and pay regular monthly rent. Then, depending on your contract, a portion of the rent you pay can be put toward the purchase price. Ultimately, it allows you to save as you go and build home equity while you rent. Additionally, it allows you to live in your future home while Northern Virginia property managers handle maintenance, repairs, and more. 

There are two types of rent-to-own contracts–a lease option or a lease purchase. A lease option allows you to buy the home if you want, but without obligation. You can walk away without penalty if you change your mind. 

On the other hand, a lease-purchase agreement makes you legally obligated to purchase the home at the end of the lease term. Therefore, you could face legal trouble if you change your mind or abandon the deal because you don’t want or can’t afford the home. As such, it’s essential to weigh the pros and cons of each option carefully. Next, we’ll go over the process of entering a rent-to-own property agreement. 

Steps to Buying a Rent-To-Own Property

If you’re considering a rent-to-own property agreement, you’ll want to know the necessary steps. As such, here’s what you need to know about the process of renting to own. 


  1. Review the Contract- First and foremost, you’ll want to carefully review your legal contract. So, check the terms of the agreement, understand your obligations, and sign it when you feel comfortable.
  2. Agree on a Purchase Price- Your rent-to-own agreement should specify the home’s purchase price. Sometimes, you and the seller agree on a price when you sign the contract, while other times, the price is determined when the lease expires. Most buyers like to “lock in” the price, especially if home prices are rising.
  3. Apply Rent to the Purchase Price- While renting the home, some of your monthly rent payments are applied to the eventual purchase price. For instance, if you pay $1,500 monthly for three years, and 25% of it goes toward the purchase, you’ll earn a $13,500 rent credit.
  4. Maintain the Home- Sometimes, you’re responsible for maintenance in a rent-to-own property, while other times, you may split maintenance responsibilities with your landlord. Usually, since sellers are generally responsible for HOA fees, taxes, and insurance, they also cover maintenance. However, you’ll want to read the fine print of your contract so you know your responsibilities.
  5. Buy the Property- When your rent-to-own contract ends, you have two options, depending on the type of contract you signed. If you have a lease-option contract, you can either buy the property or move out like any other rental. However, if you signed a lease-purchase agreement, you may be legally obligated to buy the property.

Pros and Cons of Offering Rent-To-Own Properties

There are plenty of benefits to rent-to-home properties. After all, they allow you to live in your potential home without going through the process of getting a mortgage right away. However, rent-to-own has a few potential downsides, depending on your agreement. So, let’s review this housing method’s main pros and cons

Benefits of Rent-To-Own Properties

  • Allows You to Save Money- Renting-to-own gives you time to save money for a down payment, all while living in your potential home. You know exactly what you’re getting before you decide to purchase it. 
  • Fewer Repair Costs- Most rent-to-own agreements split maintenance and repair responsibilities between the landlord and tenant. As such, you may be responsible for minor repairs while your landlord covers extensive maintenance
  • Gives You the Option to Buy or Move- At the end of your agreement, you either buy the home or move out as you would with any regular rental home. If you decide to purchase the home, you’ll get a home loan through a mortgage lender and go through the standard homebuying process. 

Disadvantages of Rent-To-Own Properties

  • Potential Loss of Money- If you decide not to buy the home, you give up all the money you paid in rent. Unfortunately, this is a significant loss of money for some people looking to achieve homeownership. 
  • May Not Qualify to Buy the Home- If you want to buy the home but can’t afford a mortgage loan, you give up the money you paid in rent and the property. As such, if you enter a rent-to-own agreement, it’s crucial to ensure you can buy the home at the end of the lease. 

Who Are Rent-To-Own Properties Right For? 

Rent-to-own isn’t for everyone. However, it could be right for you and your housing situation. For instance, if you’re hoping to become a homeowner but can’t quite afford it yet, a rent-to-own agreement gives you time to get your finances in order. In addition, while renting, you can boost your credit score and save money for a down payment while already living in the home. 


As such, a rent-to-own property may be right for you if you plan to stay in the area for a long time, need more to pay a sizeable down payment, or need to improve your credit score before buying a home. 

Remember that rent-to-own properties generally have higher monthly rental rates than nearby, similar properties. After all, you’re paying extra to put toward your rent credit, allowing you to put it toward the purchase price. 

While renting, you’ll want to start improving your credit score and building solid credit. If you have debt, try paying it off before applying for a mortgage loan, as it may allow you to get better terms and a lower interest rate. 

How to Manage Your Rent-To-Own Properties With Ease

No matter what types of properties you own, it’s important to know how to manage them correctly. Whether you offer rent-to-own properties, vacation rentals, or regular monthly rentals, maintenance, tenant communication, and collecting payments are crucial. As such, many busy property owners look to professional property management to keep their rentals maintained and up-to-date. 

learn more about our management services today!

Bay Property Management Group offers full-service management for rentals near Baltimore, Philadelphia, Northern Virginia, and Washington, DC. We can help take care of the rental process from start to finish. So whether you need a solid tenant screening process, rental marketing, rent collection services, or maintenance, we’ve got you covered! Contact us today to learn more about our comprehensive management services and how we can help your business succeed.