With the strict lending regulations, it can be difficult for buyers to obtain mortgage financing. This often leads them to think about a Rent to Own option. It sounds like a viable options, but in reality it can be complicated.
Here are just a few general things to think about:
First, the buyer/tenant needs to find a home that 1. you want to buy 2. with a seller that is capable of leasing instead of selling. The latter can be difficult because the seller often needs the proceeds of the sale to transition to their new home. The best type of seller to pursue are investors and builders. Still, it's never a guarantee.
Secondly, as a buyer, you still need down payment money for this type of transaction. Depending on the situation, you'll need a security deposit and additional deposit to be held in escrow until you purchase the home at the future date. Maybe you have the downpayment, but need to build up your credit score for mortgage approval. As a seller, they will want to know you are aggressively working towards your credit through a repair service of some sort.
When going this route, you are essentially signing a lease for an agreed upon term with the option to buy at the end of that term. As a buyer, there could be penalties if you do not buy at the end of the term. And as a seller, you may have lost out of potential buyers while home was under lease contract.
There are many pros and cons for each party in this type of agreement. To make it work, everyone involved needs to have the same goal in mind.
If you have any specific questions, please contact me directly at kskneeland@gmail.com or 484-343-2406
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