Rent to Own: What Are the Risks?

If you have ever heard of rent to own financing then it can sound like a great program. Rent a house and while you are renting you are working toward purchasing the house. The problem is that most of the people who enter a rent to own home NEVER end up buying the house. In fact many people who enter a rent to own never even do anything to begin working toward buying a house. How do you make sure that if you enter into a rent to own you wont have these same problems? The answer to this is research. While you as a tenant buyer may feel privileged to find out about a rent to own house, the reality is that you must look at this as a business transaction and try to make sure things are in place. So here are some questions to ask and some things to consider when look at a rent to own program.

1. Is this a rent to own company or just a seller trying to sell?

A rent to own company is completely different from a regular seller doing rent to own. A regular seller is just selling a house and may not have any actual knowledge or ability to help you buy the home you will be renting. A rent to own company has done the rent to own process over and over again. They have a system setup with pieces in place such as a lender that understands challenged credit, a credit repair service that can show you how to improve your scores and an inspection service to ensure that you get a quality home. If I were looking for a rent to own home, I would only consider using a rent to own company.

2. Is it my responsibility to get financing or will you help me?

When you enter into a rent to own agreement it is expected that you will eventually purchase the house you are renting. The catch is in many cases you are expected to do everything on your own to get into position to buy the house. If you don’t fix your credit and get your financing in place then you will not buy the house and you will lose your deposit. Some places will help you get your credit in order. Our company for example, has a full credit repair service that we send you to free of charge. They don’t fix your credit for you but they will tell you what you need to do and help yo accomplish your goal.

3. How do I know you will pay the mortgage?

What safeguards does the company or seller give you to show that they are paying the mortgage on the house that you are living in. In this economy, many renters are shocked when they are given foreclosure papers on the house they are renting because the seller did not pay the mortgage, they just pocketed the rent money. You need to be assured that your payments are going where they are suppose to go. Does the seller show you any proof that payments are being made?

4. Who is responsible for repairs?

Who fixes any problems with the house. In some cases the landlord will fix anything that goes wrong just like a regular rental. But in many cases the landlord has no responsibility to fix anything since you are on a rent to own agreement. Find out who fixes what so you can adjust your budget accordingly. Also, some companies may offer repair insurance. So that even if you are responsible for the repairs you only risk paying a small fee if something were to break.

5. Who pays the taxes and utilities?

Finally, you need to know who is responsible for the taxes on the property and the utilities. Since you are entering a rent to own, these things may not be included in your regular payment. You need to know what utilities are you responsible for so that you can make sure you budget for these expenses.

These are just some of the things you should look at when considering rent to own. A rent to own home can be a great experience and it can help you buy your next home. But you must still research who you are working with and find a place that offers a solid plan that will truly help you rent and then own!

Until next week, God Bless…

Arthur V. Veal IV is the owner of We Buy Houses Home Services, a real estate investment company. They specialize in selling houses with owner financing. They have sold hundreds of houses to deserving families that were not able to get bank loans at the time. His company boast an 83% success rate when helping their buyers refinance the house that they get owner financing on. Find out more about there programs by visiting their site at

Fill out a home buying application here!