Rent to Own A Condo

Rent to own condos have been hotter than ever.  With financing being more difficult to obtain and the amount of people being foreclosed on, rent to own condo programs have sprouted up everywhere.

Rent to own works by applying a portion of the rent each month towards the down payment of a condo.  For instance, let’s say you are paying $1,000 a month in rent.  The seller of the condo may agree to use $500 of that each month as a discount off the price of the condo if you close on the condo twelve months from the date of renting it.  If the price of the condo is $200,000 and you typically would need a 5% down payment or $10,000, the $500 per month would add up to $6,000 at the end of one year resulting in only needing $4,000 for the down payment.  This process really helps renters build up a portion of the down payment for a piece of real estate.

Rent to own condos in Chicago, Miami condos, New York condos or Los Angeles condos can be found everywhere. There are an abundant supply of product that is not sold by developers and this is a nice win-win for all parties.  The tenant gets a chance to live in the unit they might possibly be able to buy a year from now and the seller has the unit rented for a year with a possible sale twelve months from now.  The length of time for this process is always negotiable between the buyer and seller.  It could be as quick as three months or last as long as five years.  It really comes down to the parties involved and what everyone agrees upon. 

Financing a condo that goes through a rent to own program can be tricky if you do not use the right lender.  Most have strict rules on how much of the rent can be applied to the down payment.  Just as negotiations with developers and sellers, banks and financing condos can be negotiated with as well.  Make sure to evaluate at least three banks before deciding on your financing institution. 

If you decide after living in the condo for a full year that you really do not want to buy the condo, if the contracts are set up correctly in the beginning, you are able to just walk away from everything.  You would not be credited back with any of the rent but you would not be forced to buy the condo. 

Rent-to-own a condo is a great alternative in today’s market place.  Just make sure you find the right condo Realtor to guide you through the process.