Renting vs Leasing to Own: Determine the Best Option for You

Some renters who are not ready to buy a home yet, are weighing the pros and cons of renting and leasing to own. You may be one of the many renters who are choosing to avoid debt, including a mortgage, but you would still like to make improvements to a home as if it were your own. Leasing to own may be a great option for you then, but there are some disadvantages to consider.

Pros of Renting

Renting has its advantages, including:

– Your landlord, not you, has to worry about repairs and maintenance

– The initial investment to get into a rented home (first month’s rent and security deposit) is substantially less than buying a home

– Insurance and property taxes are shared, even though the landlord doesn’t spell it out, it’s factored into your rent

– Landlord pays certain utilities, such as water and sewage

– You can buy time to save money and build up enough cash over time to purchase a home

You can benefit from renting, or leasing to own, as long as you work hard on earning and saving money. Some tenants have enjoyed the rewards of saving up enough money to buy a home with cash, while renting.

Cons of Renting

There are some disadvantages to renting that you should consider, including:

– You’re unable to update the structure to make it more energy efficient

– You cannot make home improvements necessary to meet the needs of your family

– You’re limited to using large appliances already available at the home, unless you want to pay for the landlord to store them off-site

– The landlord may not allow pets

– A bad relationship with your landlord can lead them to find ways to terminate the lease and evict you

If the cons of renting outweigh the benefits, consider a lease to own arrangement.

Pros of Leasing to Own

Leasing to own offers many benefits, such as:

– You can make improvements to the home that can save you money on energy and other costs

– Your landlord is less likely to and able to kick you off the property

– You have more freedom to change the decor and work on interior design projects

– The rent money is applied to the future purchase of the home

– It affords many opportunities to build local relationships and scout the area before making a purchase

Poorly written deals and scams have made people wonder whether renting or leasing to own is best. There are some disadvantages that can make you hesitate on using this option.

Cons of Leasing to Own

Some of the cons of leasing to own are:

– There’s no actual transfer of property until you purchase it

– The property may go into foreclosure before you purchase it

– You can lose the extra payments each month to the landlord if you decide to find another property

– Renting and leasing to own option fees and security deposits are non-refundable

– The property taxes you may have to pay during the rent term is non-refundable

-The home value may be less than the agreed to price when you’re ready to purchase it years down the road

– You can expect an increase in utility payments that you’re required to pay, such as a water bill

You can overcome many of these obstacles with proper financial planning and a well written and negotiated contract.

Renting or leasing to own is a difficult decision, that you should not take lightly. If you decide on a lease to own arrangement, hire an attorney to make sure you don’t sign something that will ruin your financial future.