Rent to own agreements have been given a bad reputation.
Today, however, with a shift in the lending market, and the challenging financial climate, rent to own agreements, also called lease options or lease purchase agreements, are returning as a mainstream home buying option.
Perhaps first and foremost, these agreements were only entered into by those with extremely poor credit. As a result, they generally ended poorly, with the transfer of property from one owner to another not being completed, but instead with an enormous amount of hassle for everyone involved. Today however, demographics with fair credit have looked to owner financing as a feasible alternative credit option. Both buyers and sellers have experienced significant benefits from these agreements.
With rent to buy options, there is no down payment required. Instead, renters agree to a rental period of one to two years, with the option to purchase the home at the agreed upon price at the end of the lease period. Then, each month, a portion of the rent is deducted from the agreed upon purchase price.