Tuesday, March 31, 2009

Rent To Own: A Creative Financing Option

As owners find it more difficult to fill new developments, they're taking a new approach to filling their units: offering rent-to-own programs. In these cases, prospective buyers are essentially able to try out apartments before taking the plunge to purchase. Or, once the lease is up, they can simply walk away.

Renting to own can be attractive for both sides of a real estate transaction. It brings cash flow to properties that otherwise might be stagnant. Buyers lacking adequate down payments, struggling with poor credit, or even recovering from a recent foreclosure, can build up savings and rebuild creditworthiness in order to get a mortgage.

There is usually a fixed amount of time you have before you commit to buying. Often that is six to nine months, if you want your rent to go towards a down payment.

It's a great option for foreign nationals: Ex-pats can build an American credit history through a rent-to own program, and eventually qualify for a mortgage. Even if they have to leave the U.S., the unit can be kept as an investment property.