Rent-To-Own contracts and an easy alternative to conventional home loans. Both buyers and sellers get the advantage of this arrangement. But before proceeding with this arrangement, everyone must understand the risks. This is much like traditional leases that landlord and tenant sign. However, this contract gives the renter an exclusive right to purchase the same home at a specified point in the future. Some amount of the whole is paid upfront as a part of the agreed monthly rent, which goes towards the purchase price. If you are searching to get houses for rent in Tupelo, MS, and want to purchase a house soon, you can prefer to enter such an arrangement.
What Is Price to Rent Ratio?
The price to rent ratio helps measure the relative affordability of renting versus purchasing in the housing market. It is easy to calculate by dividing the average price of a home during a specific time by 12 months’ worth of typical
monthly rent in the equivalent market. For example, the average price of homes in Mississippi during mid-2020 was $360,000, while the average monthly rent was $3000. To get the price to rent ratio, we need to divide $360,000 by $3000, which comes up with 12. If the ratio seems to be higher, the market is more advantageous for renting. And the lower the ratio, the more beneficial is the market for buying a new house.
What Are the Pros of Rent-To-Own?
Rent-To-Own options are appealing to buyers who expect themselves to be in a stronger financial stance within a few years. The advantages of buying the same houses for rent include:
You Can Buy It with Bad Credit Score
Even though you don’t qualify for a home loan, you can buy a house with the rent to own agreement. With time it will help you rebuild your credit scores, and you might be able to get a loan until the final time to buy the house.
You Can Buy in A Purchase Price
Home prices are increasing every day. But in a rent to own agreement, the buyer can get a deal to buy the same house they live in at today’s price, while the purchase may take place after several years in the future. The buyer also gets the opportunity to back out if home prices fall.
Buyers who want to make a purchase after living in houses for rent in Tupelo MS can arrange their home as per their choice. Those are the same houses they will eventually buy. This reduces the cost of moving after a few years.
What Are the Cons of Rent to Own Properties?
You May Lose Your Spending
Rent to own properties can have significant risks for the buyer. In some situations, the buyer can no longer buy the house and typically lose all the money they have paid so far.
Spend on Repairs
In legal agreements of apartments for rent, the landlord is responsible for all maintenance and repairs. However, in rent to own agreement, the tenant has to take
Buying a home is one of the biggest financial decisions to make. However, it does not have to be challenging when you get professional guidance and support while finding your dream property. Whether you are currently in the market and are ready to buy a new house, Jumper Realty & Associates can help you navigate the process. Talk to our property expert today for apartments for rent in Tupelo, MS.