House prices are at record high. Growing 2.9% annually since the recovery from the 2008 financial crisis and has continued to increase during the global pandemic. It has become increasingly difficult for all generations to afford a home, whether they are still working or retired. For this reason, renting to own is still a good option for many. for in 2017, for example, there were 9.2 million tenants age 65 or older. But how does rent to your own home work?

How to start the Rent to Own process?

Everyone knows the traditional lease. You pay endless rent to a landlord and never own the property you live on.

If you rent, you may miss an opportunity to buy real estate by paying by the month. This is called rent-to-ownership.

There are positives and negatives of both main processes. At the end of this article you will know which way of renting suits you best.

How does Rent to Own work?

How rent to own works is to buy a house or real estate over time by making rent payments. Think of it like a mortgage, but without the down payment.

When you rent to own, you lose the involvement of a bank, a title deed with your name on it, and the ability to make bubble payments. For many people these are non-issues, but for others these factors are make-or-break.

With a rental agreement you rent out a house for a certain period, after which you become the owner of the house. In the property industry, we call it a financing lease.

Checklist for rental to owner

There is not one real process of renting to owning. Each owner has their own process and requirements that a tenant must go through. Still, there are some core trades that need to be done. Below are some basic processes for rent-to-own transactions.

Deciding on the type of agreement

The rent-to-own process can start with a lease with an option to buy or a lease with an obligation to buy.

When you enter into a lease, you and the landlord establish a purchase price that you must pay over a specified period of time. Once you have paid off the lease, you can choose whether to buy the property or not.

Lease agreement

If you are about to get a Lease agreement, you should consult a real estate agent to negotiate the price of the house on your behalf. We have an easy way for you to find the best agents, enter your zip code below and we’ll connect you to a great agent right away.

This agreement, on the other hand, does not give you that luxury. You must buy the property as soon as the agreement has been fulfilled.


If you are curious about how renting your own home works, you may also be wondering, why wouldn’t you want to buy a house after you’ve made all the previous payments? While the final payment is usually the same as the rest, sometimes the final payment is significantly higher than the normal rent, leading to uncertainty.

Under the lease with the purchase agreement, the landlord has the right to go to court, which means that you are legally obliged to: buy the house.

The second part of the process of renting a home is making an ‘option payment’. As the name implies, the amount to be paid is negotiable, unlike the rent payments. It is usually somewhere between 1-5% of the property’s purchase price. Think of this payment as the down payment.

Keep in mind that this is much less than a down payment on a mortgage, making it a more attractive offer.

Determining the rent-to-own conditions

You and the landlord then negotiate the lease term and thus the rents. Since the price is already determined at the time of selecting the agreement, its time for both of you to decide how soon the payments will end.

It is well recommended tohats off bring your real estate agent to this meeting. The goal should be to establish rental rates that you can afford. Bee feeling good at the same time financial position at the end to make the final payment.

Defining maintenance and renovation/remodeling roles

After agreement on the rental term and prices, you determine who is responsible for maintenance. This usually depends on whether you want to do the maintenance yourself, deal with an outside source, or let the landlord maintain the property or keep it.

Most people choose to be responsible for maintenance and are given the freedom to do whatever they want with the place, including remodeling, without the landlord’s permission.

Sign the agreement

When everything is in place, it’s time to sign the deed. Have your agent go through the agreement to make sure everything is in order and in your favor. You should only sign the agreement if you are confident in the deal.

    how does rent to your own home work?

How does Rent to Own work: advantages and disadvantages

Renting to own comes with a handful of pros and cons. You take on some of the responsibilities of owning a home, but you also take on a financial risk. The market is constantly changing and there is no way to tell when the perfect time is. At the same time, there is a little more leeway with the agreement between owner and tenant. Here are some listings of what you might encounter in a rental property:

Benefits of Rent to Own

  • There is no significant down payment, allowing you to build equity before the final payment.
  • You can apply for a mortgage at the time of the final payment.
  • You and the seller can agree on how much rent you will pay and for how long.
  • No buyer competition, so you don’t have to outbid anyone at the time of purchase.

Disadvantages of renting to owning

  • You may have to pay maintenance fees (which isn’t a bad thing in anyone’s eyes).
  • By the time you get to the final payment, demand in the local real estate market may have dropped.
  • The contract is in favor of the seller and releases the landlord in case of even the smallest violations
  • The same issues you face when renting apply when you rent to own

It comes down to

We’ve now talked about: “How does rent-to-own-home work?” Rgo into Own is the easiest way for you to make a big investment, even if you have bad credit.

When searching for “how does rent to own home work?” you will see that the answer is: as simple as making regular payments to use the property for a period of time. It can be for both residential and commercial use. In most cases there is an agreement for the minimum period that the tenant must rent the property and a deposit.

Once the contract period ends, it’s only as easy as moving in and collecting your security deposit back (after deducting maintenance and utilities). If you are not ready by then, you can always extend the contract or sign a new one.

Find a real estate agent for rental to own properties

If you can’t buy a house, but you want one, you can rent a house with confidence. If you’re still stuck with the question, “how does rent-to-own-home work?” talk to one of our agents. They will gladly help you.