Step One: Explore
Explore the choices of homes for rent-to-own on the market, as well as looking for multiple lease option candidates.
Step Two: Create
Create a draft of an offer that works for you and the seller. Become familiar with the terms purchase price, rent per month, option fee, option credit, option period, property tax, HOA fees and more. These terms will be important when negotiating and deciding different prices. Remember that all of the negotiated prices will be locked and set until the end of the agreed rental term, even if other housing prices rise or fall during that time.
Step Three: Compile
Put together the final Rental Agreement, Option Agreement and Sales Contract. Make sure to look at lease options that require you to put as little money down as possible.
- Rental Agreement: This includes the how and where the rent is paid, the security deposit amount and where it will go at the end of the lease term, monthly rent rate, how long the rental period will be, notices of late fees and more.
- Option Agreement: This agreement will ensure the seller cannot sell the home to any other party, as long as you are following the terms agreed. If you decide to buy the house at the end of the lease period, the option fee will become a part of your down payment. If you decide to not purchase the house, the option fee becomes income for the seller. The Option Agreement will include whether or not the option fee can or be refunded, how and when the option fee will be paid, price of the option fee, a deadline of when the option will expire and more.
- Sales Contract: This includes home inspection requirements, purchase price of the home, list of items to be included upon sale (appliances, furniture, etc.), financial details on the new loan and details on title insurance. The sales contract is standard and provided by your real estate agent.
Step Four: Maintain
Make sure you maintain, build or repair your credit to help you successfully purchase your home at the end of the rental period. And at the end of the agreement, you could be walking away with your new home!