A Guide for Rent to Own Homes in Perth

The traditional route to homeownership requires enough stream of income to be eligible for mortgage and down payment. A new alternative has been launched since most people cannot afford to jump headfirst into property ownership due to financial reasons. Rent to own homes provide middle-class and working families with the opportunity to rent houses and then opt to buy the property before the lease expires. For this reason, there are segments within the contract for rent to own agreements.

These include:

• Standard lease formalities and conditions
• Option for purchase

For your best interests, you’ll need a guide to assist you through the process. Our team has assembled a list of things you need to know as you progress through the stages of owning a home.

Things to know about Rent to Own Homes

Non-refundable Initial Costs

An upfront fee is paid to the seller at the beginning, which allows you to extend the date for purchase. The amount or percentage of this fee is negotiable, but it solely depends on the renter. There is no set value for the option fee. Typically, it is around 1% to 5% of the total offer price of the property. The option fee does not affect or add to the purchase price. It is entirely separate.

Types of Contracts 

There are two types of rent-to-own property contracts. These are:

• Lease-Option

• Lease-Purchase

As the name suggests, lease-option provides you with a choice to either buy the property at the end of the lease or to look for another. It poses no obligation to go through with the purchase. You do not have to keep renting or hustle to fully pay for the house. The offer for purchase expires as the lease ends. It ends your right of purchase, whereas lease-purchase legally requires you to buy the property after the lease expires.

To save yourself from legalities, you should get the document reviewed by your attorney. If you end up signing a Lease-Purchase, you will have to purchase the house even if you don’t financially afford it.

House Price Quote

These agreements sometimes lead to early price quotes at the beginning of the lease, which is higher than the market rate for the same rent to own properties nearby. On other occasions, the price for the property is quoted after the lease expires with respect to the popular listings at that moment in time. Many buyers try to lock the price initially for properties that have escalating values. 

Rent Price and Credit for Lease Term

The rent remains constant throughout the term of the lease without any hitches. You have to identify the percentage of rent that adds to the purchase price of the property. The rent for rent-to-own homes is kept higher to make up for the rent credit you’ll receive. Some sellers provide the offer to relocate the option fee towards closing costs.

Investment Factor

Traditional renting services put families in a financial loop without getting any closer to buying the property. The rent-to-own homes make you one step closer to a significant investment factor. Many companies assist in this transition without hassles. Similarly, experts at Stop Renting Perth create a roadmap for successful homeownership. Bringing in a medium of housing experts will help you save time and money in the long run. They will make your investment worth it.

Frequently Asked Questions

• How much money do you have to put down on a rent-to-own home?

The upfront costs of a rent-to-own home range from 1% to 5% of the total purchase cost usually. It is a reasonable price and differs for every type of home. These prices are much higher than the general prices in the area because the upfront costs can be relocated in the end towards closing costs.

•  Is it better to opt for rent-to-own homes or to just rent an apartment?

Stop yourself from falling into the trap of traditional renting, where you won’t be able to save enough to buy a house because you’ll be too busy spending on living costs monthly. Stop Renting Perth is one company you can rely on to create a successful roadmap towards homeownership.

• Are rent-to-own homes legit?

Yes, rent-to-own homes are very legal and authorized. They are developed on state-recognized contracts such as lease-option and lease purchase. Before opting for rent-to-own, you should familiarize yourself with the process to avoid any legal issues.

• What is a purchase option?

The purchase option allows buyers to rent a home initially with the right to purchase it before the lease expires. It is an option presented in your contract that does not put you under any obligations to buy the house. It offers you the choice.

• What is a rent-to-own agreement?

It is a standard contract that states the quoted purchase price, the set monthly rent, premium payments such as option fee, and deposit and maintenance fees. There are two types of agreements for this service:

Note: Identify your contract accordingly to protect yourself from legally getting bound to purchase the house.

• What’s the catch with rent to own homes?

This option is a safe option as long as you are careful with the legalities. The leasing contract will determine it. This is why involving a team of experts is essential to carry out a smooth transition.

• What are the pros and cons of rent to own?

These homes are one of the best ways to break away from the shackles of rentals. The pros further include saving capacity, easy payoffs, and protection from property value fluctuations. The cons of this scheme are based entirely on decisions made through incomplete information. One such issue could be the choice of lease selected for your agreement. One variant will allow you the option to buy, and the other will make you bound to buy the property at the end of the lease.

• What are the benefits of rent to own homes?

These homes are cost-effective and are great investment opportunities that will help you get home ownership in a very secure manner. It is highly advantageous for those people who do not qualify for a mortgage loan. Partnering with a great service provider will allow you to have the best experience for this decision. That is mainly because rent-to-own properties come with many legalities.